Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
FileFiled by the Registrant
[XX]☒Filed by a Party other than the Registrant
[ ]☐Check the appropriate box:
[XX] Preliminary Proxy Statement [ ] Confidential, for use of the Commission [ ] Definitive Proxy Statement only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-12 ASPEN EXPLORATION
☒ | Preliminary Proxy Statement |
☐ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to Rule 14a-11(c) or rule 14a-12 |
ENSERVCO CORPORATION
-----------------------------
(Name
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------
(Name
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate Box:)
[XX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11:(1)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.box):
(3) Filing Party:
(4) Date Filed:
ASPEN EXPLORATION
☒ | No fee required. |
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
☐ | Fee paid previously with preliminary materials: |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount previously paid: |
(2) | Form, Schedule or Registration Statement no.: |
(3) | Filing Party: |
(4) | Date Filed: |
ENSERVCO CORPORATION
2050 South Oneida
999 18th Street, Suite 208
1925N
Denver, CO 80224
- --------------------------------------------------------------------------------
October 9, 2009
Dear80202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING
TO BE HELD ON JUNE 26, 2020
May 11, 2020
Fellow Stockholders:
You are cordially invited to attend
Notice is given that the Annual Meeting of Stockholders of Aspen ExplorationEnservco Corporation ("Aspen"(“Enservco” or the "Company") will be held June 26, 2020, at 2:00 p.m. Mountain Time. Due to the evolving COVID-19 situation, we plan to conduct the meeting primarily via conference call format in order to safeguard the health of Enservco stockholders and employees. Accordingly, we encourage stockholders to vote either online or by mailing their proxy card as described below. The physical Annual Meeting will be held at 999 18th Street, Suite 1925N, Denver, CO 80202, on November 20, 2009, at ______, localthe same date and time at _____________________________ (the "Annual Meeting") to consider
various proposals. Proposal numberlisted above, but the only Enservco personnel present will be one isvote inspector who will be responsible for accepting ballots in person, if any. Again, however, for the approvalhealth and safety of the election of
four directors to serveall concerned, we strongly recommend stockholders cast their votes online or via mailed proxy card and participate in the class so designated until their successorsmeeting via conference call.
Stockholders participating via conference call may listen to the meeting in real time by calling 844-369-8770 or, for international callers, 862-298-0840. In addition, stockholders may submit questions they would like to have been elected and qualified. The Board of Directors recommends that allanswered at the Annual Meeting by emailing those questions to mhargrave@enservco.com.
At the Meeting, Enservco will submit the following three proposals to its stockholders vote for each of the persons nominated by the Board of Directors.
Proposal number two isapproval:
1. To elect six directors for the approvalensuing year;
2. To ratify and approve the appointment of a resolution granting Aspen's
BoardPlante & Moran, PLLC, as Enservco's independent registered accounting firm for the year ended December 31, 2020.
3. To approve and adopt an amendment to our second amended and restated certificate of Directorsincorporation to effect, at the authority, in its discretion to dissolve the Company.
The Board of Directors did not agree with respect to whether the Board should
recommend that stockholders vote for, against, or abstain with respect to
Proposal number two. One member recommends that stockholders vote against this
resolution; and three members of the Board of Directors have agreed to forward
the resolution to the stockholders for consideration without making a
recommendation. The reasons that each member of our Board of Directors came(with the effectiveness or abandonment of such amendment to their recommendation or did not make a recommendation either for or againstbe determined by the
proposal are described in the Proxy Statement.
Whether or not you are able to attend the Annual Meeting in person, it is
important that your shares be represented. We have provided instructions on how
you may vote your shares in the Notice of Internet Availability of Proxy
Materials and in this Proxy Statement. Please vote as soon as possible. You may,
of course, attend the Annual Meeting and vote in person even if you have
previously submitted voting instructions for your shares. It is very important
that every stockholder vote.
Your support of each proposal is very important to the future success of
your Company.
Sincerely yours,
R.V. Bailey, Chief Executive Officer
ASPEN EXPLORATION CORPORATION
2050 South Oneida Street, Suite 208
Denver, CO 80224
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 20, 2009
- --------------------------------------------------------------------------------
October 9, 2009
TO THE STOCKHOLDERS OF ASPEN EXPLORATION CORPORATION:
The Annual Meeting of Stockholders of ASPEN EXPLORATION CORPORATION, a
Delaware corporation, ("We" or "Aspen") will be held on November 20, 2009
at_______, local time, at __________________ (the "Annual Meeting"), to consider
and take action on:
1. The election of four directors to serve in the class so designated
until reelected at an annual meeting of stockholders and until their
successors have been elected and qualified.
2. Consideration of a resolution granting Aspen's Board of Directors as permitted under Section 242(c) of the authorityDelaware General Corporation Law) a reverse stock split of our shares of common stock issued and outstanding or reserved for issuance, at an exchange ratio of not less than 1-for-10 and not greater than 1-for-25, such exchange ratio to dissolve the Company. Thebe determined by our Board must exercise that
authority on or before December 31, 2010 or the authority to dissolve
will be revoked. The Board may exercise or fail to exercise the
authority to dissolve the Company inof Directors at its discretion.
3. Suchsole discretion; and
4. To consider and act upon such other businessmatters as may properly come before the Annual Meeting orand any adjournments or postponements thereof.
The discussionforegoing items of the proposals set forth above is intended only as a
summary and is qualified in its entirety by the information containedbusiness are described more fully in the accompanying Proxy Statement. Any other business that may properly come before the Meeting will also be conducted. The Board of Directors is not aware of any other business to come before the Meeting.
The Board of Directors set May 5, 2020 as the record date for the Meeting. Only holders of record of our common stockCommon Stock as of close of business on October 2, 2009 ("the Record Date"),May 5, 2020 will be entitled to notice of and to vote at thisthe Annual Meeting, and any postponements or adjournments thereof.
STOCKHOLDERS ARE CORDIALLY INVITED
The Company recommends the approval of all the above-listed proposals. Please vote promptly by signing, dating and returning the enclosed proxy card, voting by telephone, or voting on the Internet by following the instructions on your Notice of Internet Availability of Proxy Materials. In the event that a stockholder decides to attend the Meeting, it, he, or she may, if so desired, revoke the proxy by voting the shares in person at the Meeting. If you plan to attend the Meeting, please ensure that you have an admission ticket or other authorization from the record holder of your shares.
EACH STOCKHOLDER, WHETHER OR NOT THE STOCKHOLDER PLANS TO ATTEND THE MEETING, IN PERSONIS REQUESTED TO VOTE BY COMPLETING, SIGNING, DATING AND PROMPTLY RETURNING THE MANAGEMENTENCLOSED PROXY CARD OR VOTING BY TELEPHONE OR INTERNET. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY HOPES THATA WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE THE PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL FIND IT CONVENIENTNEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO ATTEND.
Stockholders, whether or not they expectVOTE IN PERSON AT THE MEETING.
| Sincerely, | |
 | |
| Ian E. Dickinson | |
| Chief Executive Officer |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF ENSERVCO’S
PROXY STATEMENT
We will be using the Securities and Exchange Commission’s Notice and Access rules, which allow us to be present atmake the Annual
Meeting, are encouraged to vote their sharesproxy materials available on the internetInternet, as instructed in
the primary means of furnishing Proxy Materials to stockholders. On or about May 11, 2020, we will mail to all stockholders a Notice of Internet Availability of Proxy Materials, or if thewhich contains instructions for accessing our Proxy Materials were mailed to you, you may instead complete, sign, dateon the Internet and returnvoting by telephone or on the enclosed proxy card. Any person givingInternet. The Notice of Internet Availability of Proxy Materials also contains instructions for requesting a proxy hasprinted set of Proxy Materials. The Proxy Statement and Annual Report on Form 10-K for the power to revoke it at
any time by following the instructions provided in the Proxy Statement.
By Order of the Board of Directors:
R.V. Bailey, Chief Executive Officer
PLEASE DATE, SIGN AND PROMPTLY RETURN YOURfiscal year ended December 31, 2019 are available at: www.edocumentview.com/ENSV.
2020 PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVINGSTATEMENT
TABLE OF SUCH PROXY DOES NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
YOUR VOTE IS IMPORTANT
3
ASPEN EXPLORATIONCONTENTS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING | 6 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 9 |
PROPOSAL NO. 1 ELECTION OF DIRECTORS | 11 |
PROPOSAL NO. 2 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 14 |
| PROPOSAL 3 – APPROVE AND ADOPT AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF COMMON STOCK | 16 |
| BACKGROUND | 16 |
| REASONS FOR THE REVERSE STOCK SPLIT | 17 |
| BOARD DISCRETION TO IMPLEMENT THE REVERSE STOCK SPLIT | 18 |
| EFFECTS OF THE REVERSE STOCK SPLIT | 18 |
| CERTAIN RISKS AND POTENTIAL DISADVANTAGES ASSOCIATED WITH THE REVERSE STOCK SPLIT | 20 |
| EFFECTIVE DATE | 20 |
| EXCHANGE OF STOCK CERTIFICATES | 21 |
| TREATMENT OF FRACTIONAL SHARES | 21 |
| DISCRETIONARY AUTHORITY OF THE BOARD TO ABANDON THE REVERSE STOCK SPLIT | 21 |
| NO APPRAISAL RIGHTS | 22 |
| CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT | 22 |
| APPROVAL OF STOCKHOLDERS OF THE PROPOSAL | 24 |
CORPORATE GOVERNANCE | 25 |
EXECUTIVE OFFICERS | 32 |
EXECUTIVE COMPENSATION | 33 |
COMPENSATION OF DIRECTORS | 42 |
EQUITY COMPENSATION PLAN INFORMATION | 44 |
ANNUAL REPORT ON FORM 10-K AND ADDITIONAL INFORMATION | 44 |
OTHER MATTERS | 44 |
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS | 45 |
STOCKHOLDER PROPOSALS - 2021 Annual Meeting of Stockholders | 46 |
| Appendix A -- Form of Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Enservco Corporation | 47 |
Form of Proxy Card | 50 |
ENSERVCO CORPORATION
2050 South Oneida
999 18th Street, Suite 208
1925N
Denver, CO 80224
- --------------------------------------------------------------------------------
80202
PROXY STATEMENT
FOR THEANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 20, 2009
- --------------------------------------------------------------------------------
October 9, 2009
We are furnishing this Proxy Statement to stockholders of ASPEN EXPLORATION
CORPORATION ("We" or "Aspen" or the "Company"June 26, 2020 at 2:00 p.m. Mountain Time
May 11, 2020
Fellow Stockholders:
This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation by the Board of Directors of Enservco Corporation (“Enservco” or the “Company”) of proxies by and on behalf of our board of directors ("Board of
Directors" orto be used at the "Board") for use at our Annual Meeting of Stockholders (the "Annual Meeting"“Meeting”) to be held at 999 18th Street, Suite 1925N, Denver, CO 80202 on June 26, 2020, at 2:00 p.m. local time, and at any adjournments or postponements thereof. We will holdDue to the Annual Meeting on November 20, 2009, at______, at _________________________.evolving COVID-19 situation, we plan to conduct the meeting primarily via conference call format in order to safeguard the health of Enservco stockholders and employees. Stockholders participating via conference call may listen to the meeting in real time by calling 844-369-8770 or, for international callers, 862-298-0840. The Annual Meeting is being held for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Stockholders.
This proxy statementProxy Statement (including the Notice of Annual Meeting of Stockholders) and the Company'sis first being made available to stockholders beginning on or before May 11, 2020. The Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009 ("December 31, 2019 (“Annual Report"Report”), including financial statements (collectivelywas filed with the "Proxy Materials"Securities and Exchange Commission (the “SEC”) on March 20, 2020. This Proxy Statement and the Annual Report are collectively referred to herein as the “Meeting Materials.”
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Notice and Access Model
We are making the Meeting Materials available to stockholders on the Internet under the SEC’s Notice and Access model. On or before May 15, 2020, we will mail to all stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) in lieu of mailing a full printed set of the Meeting Materials. Accordingly, our Meeting Materials are first being providedmade available to shareholders beginningour stockholders on the Internet at www.edocumentview.com/ENSV, on or about October 9, 2009.
A noticebefore May 15, 2020. The Notice includes instructions for accessing the Meeting Materials and voting by mail, telephone or on the Internet. You will also find instructions for requesting a full printed set of the Internet AvailabilityMeeting Materials in the Notice.
We believe the electronic method of delivery under the Notice and Access model will decrease postage and printing expenses, expedite delivery of proxy materials to you and reduce our environmental impact. We encourage you to take advantage of the Proxy Materials ("Notice") will be
mailed to certain shareholders on or about October 9, 2009. If you received a
Notice by mail, you will not receive a printed copyavailability of the Proxy Materials.
Instead, the Notice will instruct you as to how you may access and review all of
the information contained in the Proxy Materials. The Notice will also instruct
you as to how you may submit your proxy materials on the Internet. If you received the Notice but would like to receive a full printed copyset of our Proxy Materials andthe proxy card, and have not
previously requested a paper copy of these materials in the mail, you shouldmay follow the instructions in the Notice for requesting such materials.
Solicitation/Cost of the Meeting
The enclosed proxy is being solicited by the Company’s Board of Directors (the "Board"). The costs of the solicitation will be borne by the Company. Proxies may be solicited personally or by mail, telephone, facsimile or email by directors, officers and employees of the Company, none of whom will receive any additional compensation for such solicitations. The Company will reimburse banks, brokers, nominees, custodians and fiduciaries for their reasonable out-of-pocket expenses incurred in sending the proxy materials included into beneficial owners of the Notice.
VOTING SECURITIES
Company’s shares.
Record Date, Voting Rights, and Votes Required
Holders of recordshares of our common stockEnservco Common Stock (the “Common Stock”) at the close of business on October
2, 2009May 5, 2020 (the "Record Date"“Record Date”) will be, are entitled to notice of, and to vote on all matters. Onat, the Meeting. As of the Record Date, we had 7,259,62255,612,829 shares of common stock issued andCommon Stock were outstanding. The
For all Proposals, holders of shares of our common stockCommon Stock are each entitled to one vote per share. OurCumulative voting securities include only our outstanding common stock. (When used
herein,is not permitted in the word "you" referselection of directors or any of the proposals being submitted to our stockholders.)
the stockholders at the Meeting.
For all Proposals, the presence in person or by proxy of the holders of one-third of the votes entitled to be cast as of the Record Date constitute a quorum for the transaction of business at the AnnualMeeting. The presence in person or by proxy of the holders of votes entitled to be cast of at least 18,537,610 votes at the Meeting is required for a quorum.
In the event there are not sufficient votes for a quorum mustor to approve any proposals at the time of the Meeting, the Meeting may be present. Aadjourned in order to permit further solicitation of proxies. Abstentions will count towards quorum consistsrequirements.
As to the election of directors under Proposal No. 1, the proxy card being provided by the Board enables a stockholder to vote for the election of each of the nominees proposed by the Board, or to withhold authority to vote for one or more of the nominees being proposed. If a quorum is present, directors are elected by a plurality of votes cast, without respect to either (i) broker non-votes, or (ii) proxies as to which authority to vote for one or more of the other nominees being proposed is withheld.
If a quorum is present, the affirmative vote of a majority of the shares entitledvotes cast on the matter is required to vote at the
meeting. Forapprove Proposal No. 1,2. As to this Proposal, a stockholder may: (i) vote “FOR” the four nominees for our Board of Directors
receivingproposal, (ii) vote “AGAINST” the greatest number of affirmative votes cast will be electedproposal, or (iii) “ABSTAIN” with respect to serve
on the Board of Directors. Proposal No. 2 must be approved by a majority of
shares outstanding and entitled to vote thereon. Cumulative voting shall not be
allowed in the election of directors or for any other purpose.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum.proposal. Abstentions and broker non-votes will not be counted forhave an effect on this proposal.
Proposal No. 2 is advisory in nature and non-binding on the purposesCompany; however, our Board values the opinions of determiningall of our stockholders and will consider the outcome of thethis vote when making future decisions on the 4
election of directors or on Company’s independent auditor selection.
Proposal No. 2 although (because3, approval of the requirement
for approval byproposal to approve and adopt the Amendment to our Second Amended and Restated Certificate of Incorporation requires the affirmative vote of the holders of a majority of the issued and outstanding shares outstanding)of Common Stock on such proposal. As to this Proposal, a stockholder may: (i) vote “FOR” the proposal, (ii) vote “AGAINST” the proposal, or (iii) “ABSTAIN” with respect to the proposal. Abstentions and broker non-votenon-votes will effectively be considered as votes against this proposal.
Voting
Whether you plan to attend the Meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive by the Meeting through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. Unless contrary instructions are indicated on the proxy, the shares of Common Stock represented by such proxy will be voted “FOR” the slate of directors described herein, and “FOR” Proposals Nos. 2 and 3. Voting by proxy will not affect your right to attend the Meeting. A proxy may be revoked at any time prior to its exercise by (i) providing notice in writing to the Company’s corporate secretary that the proxy is revoked; (ii) presenting to the Company a later-dated proxy; or (iii) by attending the Meeting and voting in person. If you plan to attend the Meeting, please ensure that you have an abstentionadmission ticket or other authorization from the record holder of your shares. Due to the possible effects of the COVID-19 virus emanating from social gatherings, we strongly encourage stockholders refrain from attending the Meeting in person.
Registered Holder
If your shares are registered directly in your name through our stock transfer agent, Computershare, Inc. (“Computershare”), or you have stock certificates registered in your name, you may vote:
• | By Internet or by telephone. To vote by internet or telephone, follow the instructions included in the Notice or, if you received printed materials, follow the instructions in the proxy card. |
• | By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the recommendation of our Board as noted above. |
• | In person at the Meeting. If you attend the Meeting, you may deliver your completed proxy card in person or you may vote by completing a ballot, which will be available at the Meeting. |
Beneficial Holder
If your shares are held in “street name” (held in the effectname of a vote against the proposal. A "broker
non-vote" occurs when abank, broker is not permitted to vote because the broker does
not have specific votingor other holder of record), you will receive instructions from the beneficial ownerholder of record. You must follow the instructions of the holder of record in order for your shares to be voted. If your shares are not registered in your own name and you plan to vote your shares in person at the Meeting, you should contact the broker or for other reasons.
We will bearagent to obtain a legal proxy or broker’s proxy card and bring it with you to the cost of soliciting proxies. In addition, we may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expensesMeeting in forwarding solicitation materialsorder to beneficial owners.
Certain of our officers, directors and regular employees may solicit proxies
personally or by telephone or facsimile. Wevote. You will not pay any officer, director,
or employee additional compensation for doing so. We do not currently intendbe able to retainvote at the Meeting unless you have a professional solicitor to assist in the solicitation of proxies.
We may, in our discretion, seek an adjournment of the Annual Meeting to a
specific time and place if a quorum is not present.
proxy card from your broker.
No Dissenters Rights
The proposed corporate actions on which the stockholders are being asked to vote are not corporate actions for which stockholders of a Delaware corporation have the right to dissent under the Delaware General Corporation Law (the "DGCL"“DGCL”).
In accordance with
Proposals by Security Holders and Other Matters
No stockholder has requested that we include any additional proposals in this Proxy Statement or otherwise requested that any proposals be submitted to the rulesstockholders at the Meeting. Management and regulationsthe Board of the SecuritiesCompany know of no other matters to be brought before the Meeting other than as described herein. If any other matters are properly presented to the stockholders for action at the Meeting and Exchange
Commission (the "SEC"), instead of mailing a printed copy of our Proxy Materials
andany adjournments or postponements thereof, the proxy card to each stockholder of record, the Company will furnish Proxy
Materials to our shareholders on the Internet. If you received a Notice by mail,
you will not receive a printed copy of the Proxy Materials. Instead, the Notice
will instruct you as to how you may access and review all of the information
containedholder named in the Proxy Materials. The Notice will also instruct you as to how
you may submit yourenclosed proxy on the Internet. If you would like to receive a
printed copy of our Proxy Materials and proxy card, and have not previously
requested a paper copy of these materials, you should follow the instructions
for requesting such materials included in the Notice.
If you are a stockholder of record, you may vote in person at the Annual
Meeting. We will give you a ballot when you arrive. If you do not wishintends to vote in person or you will not be attendinghis discretion on all matters on which the Annual Meeting, you may vote by
proxy. If you received a printed copyshares of these Proxy Materials by mail, you may
vote by proxy using the enclosed proxy card or vote by proxy on the Internet. If
you received a Notice by mail, you may vote by proxy over the Internet. The
procedures for voting by proxy are as follows:
o To vote by proxy on the Internet, go to [____________________] to
complete an electronic proxy card.
o To vote by proxy using the enclosed proxy card (if you received a
printed copy of these Proxy Materials by mail), complete, sign and
date your proxy card and return it promptly in the envelope provided.
The giving of the enclosed proxy does not preclude the right to vote
in person should the shareholder giving the proxy so desire. A proxy
may be revoked at any time prior to its exercise by (i) providing
notice in writing to the Company that the proxy is revoked; (ii)
presenting to the Company a later-dated proxy; or (iii) attending the
Annual Meeting and voting in person.
We provide Internet proxy voting to you as a stockholder to vote your
shares on-line. The Internet proxy voting procedures have been designed to
ensure the authenticity and correctness of your proxy vote instructions.
5
However, please be aware that you must bear any costs associated with your
Internet access, such as usage charges from Internet access providers and
telephone companies.
If you vote by proxy, your vote must be received by 11:59 p.m. Eastern Time
on November 19, 2009 to be counted. Shares of the Common Stock represented by all properly executed proxies received will be votedsuch proxy are entitled to vote.
Forward-Looking Statements
This Proxy Statement may contain certain “forward-looking” statements, as specifieddefined in the proxy.
If you give us a proxy, you may revoke the proxy at any time before it is
voted. You may do so:
o By giving notice to our corporate Secretary of your revocation; or
o By filing another proxy with our corporate Secretary; or
o By attending the Meeting and voting in person.
The address of our corporate secretary is 2050 S. Oneida, Suite 208,
Denver, CO 80224. We will ensure that all properly executed and unrevoked
proxies received in time are voted in accordance with the instructionsSection 27A of the beneficial owners.
6
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
The following responses to certain questions does not purport to be a
complete statementSecurities Act of the information in this Proxy Statement,1933, as amended (the "Securities Act"), and are qualified
by the more complete information set forth hereinafter.
1. When and where will the Annual Meeting be held?
As described in the notice, we will hold the Annual Meeting at
_____________________. The Annual Meeting is scheduled for November 20, 2009
at_______, local time. If you expect to attend the Annual Meeting in person,
please call Aspen at (303) 639-9860 to ensure that sufficient accommodations are
prepared.
2. Why is the Annual Meeting being held?
The Annual Meeting is being held for the following purposes that are more
completely described elsewhere in this Proxy Statement (collectively, the
"Proposals"):
Proposal No. 1 asks our stockholders to approve the election of four
directors into three classes to serve until re-elected at an annual meeting
of stockholders attributable to their class, and until their successors
have been elected and qualified.
Proposal No. 2 asks our stockholders to grant the Board of Directors the
authority to dissolve the Company. The Board must exercise that authority
on or before December 31, 2010 or the authority to dissolve will be
revoked. The Board may exercise the authority to dissolve in its
discretion.
3. Who is asking for my vote?
The Board of Directors is sending or providing this Proxy Statement, the
attached Notice of Annual Meeting of Stockholders, the Notice of Internet
Availability of Proxy Materials, and a proxy card to you and all other persons
who are stockholders of record of Aspen as of the close of business on October
2, 2009 (the "Record Date"). The Board of Directors is soliciting your vote for
our Annual Meeting.
4. Who is eligible to vote?
Stockholders of record who own shares of our common stock at the close of
business on the Record Date are eligible to vote. Each share of common stock is
entitled to one vote.
5. Might the Annual Meeting be adjourned?
We do not currently intend to seek adjournment of the Annual Meeting.
However, if we have insufficient votes to meet a quorum (which requires the
presence of at least a majority of the outstanding shares), we may consider
adjourning the Annual Meeting to a specific time and place. Unless the Board of
Directors fixes a new record date, stockholders of record for an adjourned
meeting shall be as originally determined for the meeting from which the
7
adjournment was taken. If the adjournment is for more than 30 days, or if after
the adjournment, a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote. At the adjourned meeting any business may be transacted that might have
been transacted at the meeting as originally called.
6. Why did you provide me this booklet?
This booklet is a Proxy Statement. It provides you with information you
should review before voting on the Proposals listed above and in the Notice of
Annual Meeting of Stockholders. We have also made our 2009 Annual Report on Form
10-K available to our stockholders. These proxy materials are being provided
because you have the right to vote on these important Proposals concerning your
investment in Aspen. Such proxy materials are also available on-line at
www.__________________.
7. How do I vote?
Stockholders may vote by visiting www.___________________ and utilizing the
instructions provided on the Notice. Alternatively stockholders who received the
hard copies of the Proxy Materials from Aspen may vote by completing, signing,
and returning the enclosed proxy card promptly in the enclosed envelope or by
attending the Annual Meeting in person and voting.
Joint owners must each sign the proxy card.
If you own your shares through a broker-dealer or other nominee, you must
vote your shares as instructed by that broker-dealer or other nominee. If you
own your shares through a broker-dealer or other nominee, you are not considered
to be a stockholder of record, and you will not be permitted to vote your shares
in person at the Annual Meeting, unless you have obtained a proxy for those
shares from the person who holds your shares of record.
If a stockholder wishes to participate in the Annual Meeting but does not
wish to give a proxy, the stockholder may attend and vote at the Annual Meeting
in person. Should you require additional information regarding the Annual
Meeting, please contact Aspen at (303) 639-9860.
8. Why does my name not appear as a stockholder of record?
Many investors own their investment shares through a broker-dealer or other
nominee. Broker-dealers frequently clear their transactions through other
broker-dealers and may hold the actual certificates for shares in the name of
securities depositories, such as CEDE & Co. (operated by Depository Trust
Company of New York City). In such a case, only the ultimate certificate holder
appears on our records as a stockholder even though that nominee may not have
any economic interest in the shares that you actually own through your
broker-dealer. You should contact your broker-dealer for more information about
this process. You have the right to request that your broker-dealer deliver to
you a certificate representing your shares.
9. How does the Board recommend that I vote with respect to the election of
directors?
The Board of Directors recommends that stockholders vote FOR each of the
nominees named in this Proxy Statement.
8
10. Why is the Board of Directors submitting a proposal to the stockholders to
grant the Board authority to dissolve Aspen?
In connection with preparing for and conducting the May 22, 2009 meeting of
stockholders, one stockholder submitted a request that Aspen include a
dissolution proposal to be considered at the same time that the stockholders
were being asked to consider the sale of Aspen's oil and gas assets to Venoco,
Inc. The Board of Directors had previously considered that possibility, but had
determined that presenting the dissolution proposal at the same time as the
asset sale proposal would add a significant amount of complexity and risk
stockholder consideration of the asset sale. Consequently, Aspen advised the
stockholder that Aspen would offer stockholders the opportunity to consider
dissolution of Aspen at the next meeting. In response to that statement, the
stockholder withdrew his proposal and the Securities and Exchange Commission was
able to complete its review of the proxy statement for the May 22, 2009 meeting.
11. How does the Board recommend that I vote with respect to the proposal that
would grant the Board of Directors the discretion to dissolve Aspen?
The Board of Directors proposed dissolution of Aspen for consideration of
its stockholders because of commitments made in March 2009. The Board, however,
has not determined by majority vote what recommendation should be made to
stockholders in connection with the vote:
o One director, R.V. Bailey, believes that the prospective value of
Aspen as a public corporation with a continuous filing record and
clean financial statements exceeds the value of the remaining net
assets, and believes that stockholders may benefit by the possibility
of making a business acquisition (including a reverse takeover) that
could offer Aspen's stockholders potential long term value.
o Three directors, Robert A. Cohan, Kevan B. Hensman and Douglas P.
Imperato are continuing to evaluate whether they believe the Company
can identify and execute on a business opportunity that may offer long
term value to the Company's stockholders and as such neither
authorized the Board to make a recommendation for or against approval
of Proposal No. 2.
Although the Board did not determine whether dissolution is in Aspen's best
interests at the present time, the Board did determine it is appropriate to
submit the proposal to its stockholders at the Annual Meeting. As such the
proposal is being submitted to the stockholders without any recommendation from
the Board of Directors. For further discussion on this issue see page 30 of this
Proxy Statement.
12. How can I obtain more information about Aspen?
We have included an annual report to stockholders with this Proxy Statement
that contains additional information about Aspen. Further, this Proxy Statement
and the annual report are available on-line at www._______________. In addition,
information is available on our website at www.aspenexploration.com and through
EDGAR, electronic filings maintained by the Securities and Exchange Commission
at www.sec.gov.
13. If Proposal No. 2 is approved, does Aspen have immediate plans to dissolve
the Company?
Even if the stockholders approve Proposal No. 2, actual dissolution of
Aspen would require further action by Aspen's Board of Directors, and any such
action would be based on their business judgment based on the circumstances as
they may exist in the future. If Aspen is unable to identify an appropriate
9
business opportunity or transaction to complete, the Board will likely act to
dissolve Aspen. If Aspen does identify a business opportunity or transaction
that a majority of the Board determines is worth completing, the Board will
likely allow the authority to dissolve to expire. Even if Proposal No. 2 is
approved, the Board's authority to dissolve Aspen will expire December 31, 2010
unless a certificate of dissolution has been filed with the Delaware Secretary
of State before that date.
14. If Aspen might be dissolved why are the stockholders being asked to
re-elect directors at the Meeting?
If the stockholders approve Proposal No. 2 the Company does not intend to
immediately dissolve. Instead, Aspen intends to continue to explore potential
business opportunities and transactions, and the Board of Directors elected at
this meeting will determine the advisability of any potential business
opportunities and transactions versus the benefits of dissolution. Even if Aspen
does dissolve, the dissolution process requires the Company to continue for a
period of time to resolve matters such as current or potential legal disputes,
the disposition of property, and to collect and/or settle debt obligations. As
such it would be necessary for the process to be overseen by management and the
Board of Directors.
15. If Aspen's Board of Directors decides to dissolve the Company, what happens
next?
We will:
a. file a certificate of dissolution with the Delaware Secretary of
State;
b. adopt a plan of liquidation by Board action in compliance with
Delaware law;
c. conclude our negotiations with creditors and pay or adequately provide
for the payment of the Company's liabilities;
d. distribute any remaining proceeds to the public stockholders, less any
income or other tax obligations relating to the income from the
Company's assets; and
e. otherwise effectuate the Plan of Liquidation.
16. If the Company is dissolved, will I be entitled to any distributions?
Probably, however the amount of any distributions(s) will depend on a
number of factors, including, but not limited to, the accounts payable and our
other liabilities existing on the date of the approval and adoption of the plan
of liquidation, our operating expenses that accrue following approval and
adoption of the plan of liquidation and the amount of any claims that may be
asserted against us. The expenses of our operations will include professional
fees and other expenses of liquidation and could be substantial. The
distribution stockholders may receive as part of the dissolution would be
separate from the distribution the Company plans to pay from the net, after-tax
proceeds from the sale of our California assets (expected to be paid in or about
December 2009) and any dissolution distribution likely would be paid to
stockholders of record on the date we file the certificate of dissolution with
the Delaware Secretary of State sometime after such filing takes place.
17. If the Company is dissolved and distributions are made, would the
distribution be taxable?
In general, if the Company is dissolved, our stockholders will recognize
gain or loss based on the difference between the aggregate value of
distributions to such stockholders and such stockholder's tax basis in the
common stock (See "Proposal No. 2: Approval to Grant the Board of Directors the
Authority to Dissolve the Company --"Material U.S. Federal Income Tax
Consequences of the Plan of Liquidation" beginning on page 34 of this Proxy
Statement).
10
If the Company is not dissolved and we decide to pay a cash dividend to our
stockholders, the stockholders will have taxable dividend income to the extent
of the stockholders' share of our current and accumulated earnings and profits.
We anticipate that any amount distributed in excess of our current and
accumulated earnings and profits will be treated as capital gain from the sale
of our stock.
18. Does the dissolution of the Company involve any risk of liability to our
stockholders?
If the Company is dissolved, we are obligated to pay, or make provision for
the payment of, our expenses and our fixed and contingent liabilities. Under
Delaware law, if we fail to make adequate provision for the payment of our
expenses and liabilities a stockholder could be held personally liable to any
remaining creditors for any deficiency to the extent of such stockholder's
previous distributions from us in liquidation. If a stockholder has paid taxes
on distributions previously received by the stockholder, a repayment of all or a
portion of the prior distribution could result in a stockholder incurring a net
tax cost if the stockholder's repayment of an amount previously distributed does
not cause a commensurate reduction in taxes payable by that stockholder. If we
fail to create an adequate contingency reserve for payment of our expenses and
liabilities, each of our stockholders could be held liable for payment to our
creditors for amounts owed to creditors in excess of the contingency reserve, up
to the amount actually distributed to such stockholder.
FORWARD LOOKING STATEMENTS
Because we want to provide you with more meaningful and useful information,
this Proxy Statement contains certain "forward-looking statements" (as such term
is defined in Section 21E of the Securities Exchange Act of 1934, as amended).
These statements reflect our current expectations regarding our possible future
results of operations, performance, and achievements. These forward-looking
statements are made pursuant to the safe harbor provisions ofamended (the "Exchange Act"), in connection with the Private Securities Litigation Reform Act of 1995 regulationthat involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements.
Such forward-looking statements include statements about our expectations, beliefs or intentions regarding actions contemplated by this Proxy Statement, our potential business, financial condition, results of operations, strategies, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made and are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” or “will,” and similar expressions or variations. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption “Risk Factors” included in our other filings with the Securities and Exchange Commission and common law.
Wherever possible, we have tried to identify these forward-looking
statements by using words such as "anticipate," "believe," "estimate," "expect,"
"plan," "intend," and similar expressions. These statements reflect our current
beliefs and are based on information currently available to us. Accordingly,
these statements are subject to certain risks, uncertainties, and contingencies,
which could cause our actual results, performance, or achievements to differ
materially from those expressed in, or implied by, such statements. These risks,
uncertainties and contingencies include, without limitation,(“SEC”), including the factorsdisclosures set forth under "Itemin Item 1A Risk Factors" of our Form 10-K for the fiscal year ending
June 30, 2009ended December 31, 2019 and in documents that we subsequently filed. We have no obligation
to update or revise anyour Current Report on Form 8-K dated April 28, 2020. Furthermore, such forward-looking statements that may be made to
reflect events or circumstances afterspeak only as of the date of this Proxy Statement. 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The number of shares outstanding of the Company's common stock at the
Record Date, was 7,259,622. The following table sets forth the beneficial
ownership of the Company's common stock as of the Record Date by each director
and each executive officer of the Company and by all directors and executive
officers as a group.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Position Beneficial Ownership Common Stock
---------------- -------- -------------------- ------------
R.V. Bailey Chief Executive 1,391,336(i) 19.17%
2050 S. Oneida St. Officer and Director
Suite 208
Denver, CO 80224
Robert A. Cohan President and 692,737(ii) 10.23%
2050 S. Oneida St. Director
Suite 208
Denver, CO 80224
Kevan B. Hensman Chief Financial 28,120(iii) *
2050 S. Oneida St. Officer and Director
Suite 208
Denver, CO 80224
Douglas P. Imperato Director 7,530(iv) *
2050 S. Oneida St.
Suite 208
Denver, CO 80224
All current directors and 2,119,723(v) 30%
executive officers as a
group (four persons)
* Ownership of less than one percent.
i This number includes 1,241,776 shares of stock held of record in the name
of R. V. Bailey, and 16,320 shares of record in the name of Mieko Nakamura
Bailey, his spouse. Additionally, the number includes 32,000 shares of
common stock Aspen issued to the Aspen Exploration Profit Sharing Plan for
the benefit of R. V. Bailey as a corporation contribution to Mr. Bailey's
401(k) account. The number of shares beneficially owned also includes
options to purchase 101,240 shares of common stock. However, the number of
shares does not include options to purchase 66,667 shares that have not yet
vested and will not vest until on or after September 30, 2009, to the
extent earned.
ii This number includes 527,644, shares of common stock. Additionally, Aspen
issued 30,733 shares of common stock to the Aspen Exploration Profit
Sharing Plan for the benefit of Robert A. Cohan as a corporation
contribution to Mr. Cohan's 401(k) account. The total number of shares
beneficially owned by Mr. Cohan also includes options to purchase 134,360
shares of common stock. However, the number of shares does not include
stock options to purchase 100,000 shares that have not yet vested and will
not vest until on September 30, 2010, to the extent earned.
12
iii On September 11, 2006, upon being appointedWe undertake no obligation to our boardupdate any forward-looking statements to reflect events or circumstances occurring after the date of directors, Mr.
Hensman was granted an option to purchase 10,000 shares of our common stock
at $3.70 per share. These options vested immediately upon grant and are
exercisable through September 11, 2011. Mr. Hensman also owns options
exercisable to acquire 18,120 shares included in the above table. The table
does not include options to acquire 33,333 shares, which will not vest
until on September 30, 2010, to the extent earned.
iv Includes 3,000 shares of common stock. Also includes options to acquire
4,530 shares of common stock exercisable at $2.14 per share. Does not
include options to acquire 8,333 shares that do not vest until on September
30, 2010, to the extent earned.
such statements.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial OwnersManagement
As of the May 5, 2020the Company will have 55,612,829 shares of Common Stock issued and outstanding. The following table sets forth the beneficial ownership of the Company's
Common Stock as of the Record Date by each person (other thanwho is a nominee of the directorsBoard and/or an executive officer of the Company on that date, and the number of shares beneficially owned by all of the Company’s nominees and named executive officers as a group. To the extent any of the Company) was knownnamed stockholders own derivative securities that are vested or otherwise exercisable into shares of Common Stock these securities are included in the column regarding that stockholder's Common Stock beneficial ownership (as required by Rule 13d-3(a) promulgated under the Exchange Act and the material terms of such derivative securities are explained in the notes to the table.
Name of Beneficial Owner (1) | Amount and Nature of Beneficial Ownership (2) | Percent of Common Stock |
Named Executive Officers and Nominees | ||
Richard A. Murphy | 11,312,319 (3) | 20.3% |
| Ian E. Dickinson | 2,030,000 (4) | 3.7% |
| Keith J Behrens | - | * |
Marjorie Hargrave | 330,000 (5) | * |
William A. Jolly | 130,000 (6) | * |
Robert S. Herlin | 125,000 (7) | * |
Christopher D. Haymons | 100,000 (8) | * |
All current executive officers and nominees as a group (7 persons) | 14,027,319 | 25.2% |
Notes to Security Ownership of Management and Board Nominees table shown above:
* The percentage of Common Stock beneficially owned is less than 1%.
(1) | The address of the beneficial owners in each case is c/o Enservco Corporation, 999 18th Street, Suite 1925N, Denver, CO 80202 | |
(2) | Calculated in accordance with Rule 13d-3 under the Exchange Act. | |
(3) | Consists of (i) 73,900 shares of Common Stock owned directly by Mr. Murphy; (ii) options to acquire 100,000 shares of Common Stock to Mr. Murphy which are vested or will vest within 60 days; (iii) warrants to acquire 625,000 shares of common stock held by Cross River Partners, L.P. and (iv) 10,513,419 shares held by Cross River Partners, L.P. Mr. Murphy is the managing partner of Cross River Partners, L.P. | |
| (4) | Consists of (i) 35,000 shares of Common Stock owned by Mr. Dickinson, (ii) 795,000 unvested restricted shares for which Mr. Dickinson has voting power, and (iii) options to acquire 1.2 million shares of Common Stock which are vested or will vest within 60 days. | |
(5) | Consists of (i) 55,000 shares of Common Stock owned by Ms. Hargrave and (ii) 245,000 of unvested restricted shares for which Ms. Hargrave has voting power. | |
(6) | Consists of (i) 30,000 shares of Common Stock owned by Mr. Jolly and (ii) options to acquire 100,000 shares of Common Stock which are vested or will vest within 60 days. | |
(7) | Consists of (i) 25,000 shares of Common Stock owned by Mr. Herlin and (ii) options to acquire 100,000 shares of Common Stock which are vested or will vest within 60 days. | |
(8) | Consists of options to acquire 100,000 shares of Common Stock which are vested or will vest within 60 days. |
Security Ownership of Certain Beneficial Owners
As of May 5, 2020, the Company is not aware of any persons that beneficially own beneficially, more than 5% of theits outstanding voting shares of Common Stock based solely on filings made by
such persons.
Name and Addresswho do not serve as an executive officer or nominee of the Company, except as follows:
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Common Stock | ||
Beneficial owners of more than 5% of outstanding Common Stock | ||||
Cross River Partners, L.P. 31 Bailey Ave, Suite D Ridgefield, CT 06877 | 11,138,419 (2) | 20.0 % | ||
Leroy Landhuis c/o Alan Vancil 212 N. Wahsatch Ave., Suite 301 Colorado Springs, CO 80903 | 4,732,319 (3) | 8.5 % | ||
DLH Family Trust ANZ House Main Road Avarua, Rarotonga, Cook Islands | 3,033,660 (4) | 5.5 % |
(1) | Calculated in accordance with Rule 13d-3 under the Exchange Act. | |
(2) | Warrants to acquire 625,000 shares of common stock held by Cross River Partners L.P. The following persons share voting and dispositive power with respect to the foregoing shares beneficially owned: Cross River Capital Management LLC (a Delaware limited liability company) and Richard Murphy, an individual and director of the Company. Consists of shares held by Cross River Partners, L.P. Mr. Murphy is the managing member of the general partner of Cross River Partners, L.P. | |
(3) | Based on information in a Schedule 13D report dated February 28, 2017 by Leroy Landhuis. | |
(4) | Based solely on information in a Form 4 filed November 23, 2015. The following persons share voting and dispositive power with respect to the foregoing shares beneficially owned: Michael Herman and his spouse. |
Changes in Control
There are no arrangements known to the Company which may result in a change in control of Percent of
Beneficial Owner Beneficial Ownership Common stock
---------------- -------------------- ------------
Tymothi Tombar
2713 Crawford Street 421,929(i) 5.8%
Houston, Texas 77004
John Gibbs and Susan Gibbs
P.O. Box 859
Ardmore, OK 73402 471,400(ii) 6.5%+
(i) Based solely on a Schedule 13D filed by Mr. Tombar on July 30, 2009 which
has not been amended.
(ii) Based solely on a Schedule 13G/A filed by TriPower Resources, LLC, an
Oklahoma limited liability company, successor by conversion to TriPower
Resources, Inc., and John and Susan Gibbs on February 12, 2009 which has
not been amended.
13
PROPOSAL ONE
NO. 1
ELECTION OF DIRECTORS
The following persons, all whom are currently members of the Board, have been nominated by the Board for election to servethe Company’s Board:
Keith J. Behrens, Age 54 Mr. Behrens has served as directorsa director for the Company since 2014. Mr. Behrens joined Stephens, Inc. in May 2009 as a Managing Director. Prior to joining Stephens, Inc. Mr. Behrens was a Co-Founder and a Managing Partner of AspenEnergy Capital Solutions. Mr. Behrens has over 25 years of investment banking experience with major investment banking firms including Bear Stearns and Wasserstein Perella. He has focused most of his career in covering primarily exploration and production companies as well as other energy-related companies. Mr. Behrens has generated and led the class so designatedexecution of various M&A, public & private equity and senior & mezzanine debt transactions representing in excess of 170 transactions and approximately $35 billion in transaction volume. In addition to his extensive transaction experience, Mr. Behrens served as Chairman of the IPAA’s 2013 Private Capital Conference and is active in several energy industry organizations. He was formerly on the Advisory Council for a term of one to three years depending upon which class
each is appointed to serve,the Energy Management and until the election and qualification of their
successors:
Class Nominee(s)
- ----- ----------
Class I, for a term expiringInnovation Center at the annual meeting to Douglas P. Imperato
be held duringUniversity of Texas at Austin McCombs School of Business. Mr. Behrens received his BBA and MBA from the fiscal year ending June 30, 2010
Class II, forUniversity of Texas at Austin.
Ian E. Dickinson, Age 49Mr. Dickinson has served as the Company’s President and Chief Executive Officer and as a term expiring at the annual meeting Kevan B. Hensman
to be held during the fiscal year ending June 30, 2011
Class III, for a term expiring at the annual meeting R.V. Bailey and
to be held during the fiscal year ending June 30, 2012 Robert A. Cohan
Our certificate of incorporation divides our Board of Directors into three
classes which, under Delaware law, must be as nearly equal in number as
possible. The members of each class are elected for three-year terms at each
successive annual meeting of stockholders and unless that director is removed or
resigns, serve until reelected at the next annual meeting of stockholders at
which that director is standing for reelection. Because we have not held an
annual meeting of stockholders since 1994, all of our directors are standing for
reelection at the Annual Meeting and if elected shall serve in the class and for the term designated above.
These persons will constituteCompany since 2017. Mr. Dickinson joined the entire boardCompany from Caddis Capital Investments, LLC (“Caddis”), an actively managed private equity firm, where he had been a partner since July, 2016. Prior to joining Caddis, Mr. Dickinson served as President and Chief Executive Officer of directors. The person
namedPremier Oilfield Equipment Company (“Premier”) from its acquisition by Altira Group, LLC in February, 2012, until July, 2016. Prior to that, Mr. Dickinson served as Senior Vice President of Finance at Startek, Inc. (“SRT”), a global contact center outsource services provider, from March 2011 until February, 2012, and as Managing Director at Slalom Consulting, LLC, leading the proxy intends to vote for these four nominees, eachCFO Advisory Services practice from October, 2009 until March, 2011. His previous experience includes CFO and corporate development roles at several private equity and venture capital backed companies. Mr. Dickinson began his career in various and expanding leadership roles in finance and M&A at Quest Communications (acquired by CenturyLink), Nextel (acquired by Sprint), and ADT Security Services. Mr. Dickinson is a member of whom has
been recommended for election byYoung President Organization – Colorado Chapter, and currently serves on the Board of Directors of Aspen, unless a
stockholder withholds authority to vote for any or all of the nominees. The four
nominees receiving the greatest number of affirmative votes will be elected as
directors. If any nominee is unable to serve or, for good cause, will not serve,
the person named in the proxy reserves the right to substitute another person of
his choice as nominee in his place. Each of the nominees has agreed to serve, if
elected.
Identification of Directors and Executive Officers
The following table sets forth the names and ages of all the Directors and
Executive Officers of Aspen,Fox Management, LLC and the positions held by each such person as of
the Record Date. As described above, Aspen's certificate of incorporation
divides the Board of Directors into three classes which, under Delaware law,
must be as nearly equal in number as possible. Under Aspen's Restated
Certificate of Incorporation, members of each class are elected for three-year
terms at each successive meeting of stockholders and serve until their
successors are duly elected and qualified; officers are appointed by, and serve
at the pleasure of, the Board of Directors. Since we have not held an annual
meeting since February 25, 1994, each of the directors is standing for
reelection at the Annual Meeting.
14
Name Age Position Director Since
- ---- --- -------- --------------
R. V. Bailey 76 Chief Executive Officer, 1980
Vice President,
Secretary, Director, and
Board Chairman
Robert A. Cohan 52 President and Director 1998
Chief Financial Officer, 2006
Kevan B. Hensman 53 Vice President and
Director
Douglas P. Imperato 51 Director 2008
* As described above the class each director belongs to corresponds to when
such director is up for reelection.
+ Under Aspen's Restated Certificate of Incorporation, if any newly created
directorships are filled by the Board of Directors, such additional
directors shall not be classified until the next annual meeting of
stockholders and such directorships shall be apportioned among the three
classes of directors at the next annual meeting of stockholders so as to
make all such classes nearly equal in number as possible. Since we have not
held an annual meeting of stockholders since 1994, all directors are
standing for reelection and class designation.
No arrangement exists between any of the above officers and directors
pursuant to which any of those persons was elected to such office or position.
None of the directors are also directors of other companies filing reports under
the Securities Exchange Act of 1934.
Robert A. Cohan.ACE Scholarships Advisory Board. Mr. Cohan currently serves as our President and as a
director. He served as our chief executive officer and chief financial officer
until January 2008 when he suffered a stroke and he has not been able to resume
full-time duties since then. Mr. Cohan obtained a Bachelor of Science degree in
Geology from the State University College at Oneonta, NY in 1979. He has
approximately 28 years experience in oil and gas exploration and development,
including employment in Denver, CO with Western Geophysical, H. K. van Poollen &
Assoc., Inc., as a Reservoir Engineer and Geologist, Universal Oil & Gas, and as
a principal of Rio Oil Co., Denver, CO. Mr. Cohan served as Manager, Oil & Gas
Operations, Aspen Exploration Corporation, Denver, CO from 1989 to 1992. He was
employed as Vice President, Oil & Gas Operations, for Tri-Valley Oil & Gas Co.,
Bakersfield, CA. from 1992 to April 1995, at which time Mr. Cohan rejoined Aspen
Exploration Corporation as Vice President West Coast Division (now President),
opening an office in Bakersfield, CA. HeDickinson is a membergraduate of the Society of Petroleum
Engineers (SPE) and the American Association of Petroleum Geologists (AAPG).
R. V. Bailey. Fort Lewis College in Durango, Colorado.
Christopher D. Haymons, Age 49Mr. Bailey served as our vice president until January 2008
when he was appointed as our chief executive officer as a result of Mr. Cohan's
stroke. Mr. Bailey obtained a Bachelor of Science degree in Geology from the
University of Wyoming in 1956. HeHaymons has approximately 45 years experience in
exploration and development of mineral deposits, primarily gold, uranium, coal,
and oil and gas. His experience includes basic conception and execution of
15
mineral exploration projects. Mr. Bailey is a member of several professional
societies, including the Society for Mining and Exploration, the Society of
Economic Geologists and the American Association of Petroleum Geologists, and
has written a number of papers concerning mineral deposits in the United States.
He is the co-author of a 542-page text, published in 1977, concerning applied
exploration for mineral deposits. Mr. Bailey is the founder of Aspen and has
been an officer and director since its inception, and currently devotes a
substantial portion of his time to Aspen's business.
Kevan B. Hensman became a director of Aspen Exploration Corporation on
September 11, 2006. As a result of Mr. Cohan's stroke, Mr. Hensman was appointed
as our chief financial officer in January 2008. Since April 2002, except for a
one-year position as Manager of Paramount Citrus Association, Mr. Hensman has
served as an Analyst for Truxtun Radiology Medical Group, LP with the duties of
providing financial analysis; performing annual projects; and assisting the
Practice Administrator in performing various duties and assignments.
Additionally, Mr. Hensman has extensive experience in the oil and gas industry.
From November 1997 to May 1999 Mr. Hensman served as the Planner/Gas Analyst for
Texaco Exploration and Production Company. Mr. Hensman served as the Supervisor
of Fuel Supply and Acquisition Analyst from February 1991 to October 1997 for
Santa Fe Energy/Monterey Resources. In 1999, Mr. Hensman received a Bachelor of
Science degree in finance from California State University Bakersfield (CSUB).
Mr. Hensman is not a director of any other public company. As described below,
Mr. Hensman, in his capacity as chief financial officer, served and was paid as
a Company consultant.
Douglas P. Imperato. Mr. Imperato was appointed to our Board of Directors
on December 9, 2008. Since 1996, Mr. Imperato has been a self-employed geologist
in the oil and gas exploration industry. Mr. Imperato served as a director for Applied Earththe Company since 2017. Mr. Haymons is co-founder and Partner of Industria Partners, LLC, a strategic advisory and merchant banking firm focused on providing capital, restructuring, and M&A services to energy and industrial companies. Prior to co-founding Industria, Mr. Haymons was a Partner at St. Charles Capital, LLC, where he played a senior leadership role as the founder and managing director of the Energy Services & Technology Inc.Group, until St. Charles Capital, LLC was acquired by KPMG LLP in 2014. Previously, he was senior managing director, head of Investment Banking and head of the Industrials Group for Headwaters MB. He began his career with Dain Bosworth and Green Manning & Bunch. Mr. Haymons brings to Enservco 25 years of experience in investment banking, corporate finance, M&A, and merchant banking transactions. He is a graduate of The Colorado College.
Robert S. Herlin, Age 65Mr. Herlin has served as a director for the Company since 2015. Mr. Herlin is also Chairman of Evolution Petroleum Corporation, Houston, Texas, a company with a class of securities registered pursuant to Section 12 of the Exchange Act. He has served as a director of Evolution Petroleum since its inception in 2003, was elected Chairman of its Board of Directors in 2009 and served as Chief Executive Officer from September 1985inception through September 1989. As
described below,2015. Mr. ImperatoHerlin also serves on the Board of Directors of Well Lift Inc., a private company that was spun off from Evolution Petroleum and is the owner and marketer of the GARP artificial lift technology. Mr. Herlin is also President of AVL Resources, LLC, a private energy company, and is actively engaged in new venture funding and advising. Mr. Herlin has 30 years of experience in engineering, energy transactions, operations and finance with small independents, larger independents and major integrated oil companies. Since 2003 until early 2010, Mr. Herlin also served and was paid as a non-active Partner with Tatum CFO, a financial advisory firm that provides executive officers on a part-time or full-time basis to clients. From 2001 to 2003, Mr. Herlin served as Senior Vice President and Chief Financial Officer of Intercontinental Towers Corporation, an international wireless infrastructure venture. Mr. Herlin also served on the Board of Directors of Boots and Coots, Inc., an oil field services company, from 2003 until its sale to Halliburton Company consultantin September 2010. Prior to 2001, Mr. Herlin served in various officer capacities for upstream and downstream oil and gas companies, both private and public. Mr. Herlin served on the Engineering Advisory Board for the Brown School of Engineering at Rice University from 2013 to 2016. Mr. Herlin graduated with honors from Rice University with B.S. and M.E. degrees in chemical engineering and earned an on-going basis.
Significant Employees and Family Relationships.
There are no family relationships between anyMBA from Harvard University.
William A. Jolly, Age 66 Mr. Jolly has served as a director executive officer,
or person nominated or chosen byfor the Company since 2015. Mr. Jolly serves as an area chairman for the C12 group, which provides peer advisory services for middle market companies. Mr. Jolly served as a principal with Scarsdale Equities, a FINRA member broker/dealer in New York City where he focused on providing innovative banking solutions for small cap companies for 10 years. Mr. Jolly spent over 15 years with Procter & Gamble managing brands and subsidiaries in the U.S. and throughout Asia. Mr. Jolly then became Vice President for the Consumer Division of Scott Paper in Asia Pacific until it was acquired by Kimberly Clark. Mr. Jolly serves on the advisory board of ZetrOZ Systems, which develops non-invasive medical devices to becomeaccelerate tissue healing and relieve pain. Mr. Jolly received his undergraduate degree from Duke University and his M.B.A. from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
Richard A. Murphy, Age 50 Mr. Murphy has served as a director or executive
officer.
Involvement in Certain Legal Proceedings
Duringfor the past five years, no present director or executive officerCompany since 2016. Mr. Murphy currently serves as the managing member of Cross River Capital Management, LLC the general partner of Cross River Partners, L.P., currently the largest stockholder of the Company has been the subject matterCompany. Mr. Murphy founded Cross River Partners, L.P. in April of any of the following legal proceedings:
(a) any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either2002. Cross River Partners, L.P. invests in micro-cap and small-cap companies with market capitalizations up to $1.5 billion at the time of initial investment. Mr. Murphy’s primary responsibility as managing member is investment research, analysis of investment opportunities, and coordinating final investment decisions for Cross River Partners, L.P. Prior to founding Cross River Partners, L.P., Mr. Murphy was an analyst and asset portfolio manager with SunAmerica Asset Management, LLC from 1998 to 2002. Mr. Murphy also worked as an associate investment banker at ING Barings in its food and agricultural division in 1998 and he worked at Chase Manhattan Bank from 1992 to 1996. He also sat on the bankruptcy or within two years priorAdvisory Board of CMS Bankcorp, Inc. and currently sits on the Applied Investment Management Board for the University of Notre Dame. Mr. Murphy serves on the Board of Directors for Williston Holding Company, Inc. a restaurant company. Mr. Murphy also serves on the Board of Trustees of Brooklyn Jesuit Prep, a not-for-profit secondary school serving low income families. Mr. Murphy received his MBA from the University of Notre Dame-Mendoza College of Business in 1998 and his bachelor’s degree in political science from Gettysburg College in 1992.
If elected, each director will serve for a one-year term and until his successor is elected and qualified.
Board Member Nominee Selection Criteria
The Company believes that each of the persons nominated for reelection to the Board have the requisite experience, qualifications, attributes and skills to enable the Board of Directors to effectively satisfy its oversight responsibilities. With regard to the nominees (each of whom is currently a member of our Board) the following factors were among those considered that time; (b)led to the Board’s conclusion that each would make valuable contributions to the Board:
• | Keith J. Behrens: Mr. Behrens has served the Company’s Board of Directors since July 15, 2014. Mr. Behrens has over 23 years of investment banking experience with major investment banking firms including Bear Stearns and Wasserstein Perella. He has focused most of his career in covering primarily exploration and production companies as well as other energy-related companies. The Board believes Mr. Behrens’ extensive experience in M&A transactions in the energy-related field is valuable in the continued development and growth of the Company. |
• | Ian E. Dickinson: Mr. Dickinson was appointed to the Company’s Board of Directors on May 9, 2017. Mr. Dickinson brings a strong track record in the areas of private equity, oilfield service equipment, M&A, and finance. The Board believes Mr. Dickinson’s prior leadership experience in the oil field services and finance industries is valuable to the Board of Directors as a whole. |
• | Christopher D. Haymons: Mr. Haymons was appointed to the Company’s Board of Directors on January 27, 2017. The Board believes Mr. Haymons provides valuable transactional and analytical skills with respect to the oil field services industry within which the Company operates. |
• | Robert S. Herlin: Mr. Herlin was appointed to the Company’s Board of Directors on January 15, 2015. Mr. Herlin was appointed at the same time to the Audit Committee of the Company’s Board of Directors. Mr. Herlin has 30 years of experience in engineering, energy transactions, and operations and finance of companies in the oil and gas sector. The Board believes Mr. Herlin’s experience and knowledge in the oil and gas sector are valuable to the Board of Directors as a whole. |
• | William A. Jolly: Mr. Jolly was appointed to the Company’s Board of Directors and the Audit Committee on January 15, 2015. Mr. Jolly has previously served as a board member/advisor for several public companies. Mr. Jolly serves as an area chairman for the C12 group, which provides peer advisory services for middle market companies. In addition, Mr. Jolly served as a principal with Scarsdale Equities, a FINRA member broker/dealer in New York City where he focused on providing innovative banking solutions for small cap companies for over 10 years. The Board believes Mr. Jolly’s experience and knowledge advising public companies and experience in banking solutions for small cap companies are valuable to the Board of Directors as a whole. |
• | Richard A. Murphy: Mr. Murphy was appointed to the company’s Board of Directors on January 19, 2016. He is the managing member of the general partner of the Company’s largest stockholder, Cross River Partners L.P. and has experience analyzing and evaluating micro-cap companies. The Board believes Mr. Murphy’s years of experience advising emerging growth companies are valuable to the Board of Directors as a whole. |
Vote Required and Recommendation
Each share will count as one vote cast for the election of directors, and abstentions and broker non-votes will not be counted. To be elected each director must receive a plurality of the votes cast at the Meeting—the six individuals with the most votes will be elected to the Board. Unless otherwise specified, the enclosed proxy will be voted “FOR” the election of the Board’s slate of nominees. Neither Management nor the Board of the Company is aware of any criminal convictions;
(c)reason which would cause any order, judgment, or decree permanently or temporarily enjoining,
barring, suspendingnominee to be unavailable to serve as a Director.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION OF MESSRS. BEHRENS, DICKINSON, HAYMONS, HERLIN, JOLLY, AND MURPHY.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, with Enservco management. The Audit Committee has discussed with the Company’s independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board (the “PCAOB”) in Rule 3200T and has received written disclosures from the independent auditor required by the applicable requirements of the PCAOB regarding the independent auditor’s independence. The Audit Committee has discussed the independent auditor’s independence with representatives of the Company's independent auditor. Based on that review and discussions, the Audit Committee recommended to the Board that the audited financial statements be included with the Company’s Form 10-K for the year ended December 31, 2019.
| The Audit Committee | |
| Robert Herlin, Chair | |
| William A. Jolly |
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM
The Board has selected the accounting firm of Plante & Moran, PLLC (“PM”) to serve as our independent registered public accounting firm for the 2020 fiscal year. We are asking our stockholders to ratify the selection of PM as our independent registered public accounting firm. Although ratification is not required by our Bylaws or otherwise, limiting his involvement in any typethe Board is submitting the selection of business, securities or banking activities; or (d) any finding byPM to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm and as a court,matter of good corporate practice.
To the SEC or the CFTC to have violatedCompany’s knowledge, a federal or state securities or commodities
law. Further, no such legal proceedings are believedrepresentative from PM is expected to be contemplatedpresent at the Meeting and will have the opportunity to make a statement if they desire to do so and will be available to respond to questions.
Fees Billed
The following is a summary and description of fees for services provided by governmental authorities against any director or executive officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)PM and EKS&H LLLP (the auditing firm that was acquired by PM in 2018) for the years ended December 31, 2019 and 2018.
2019 | 2018 | |||
Audit fees (1) | $ 161,000 | $ 157,934 | ||
Audit-related fees (2) | — | — | ||
Tax fees | 14,471 | — | ||
All other fees (3) | 36,636 | — | ||
Total | $ 212,107 | $ 157,934 |
(1) | Audit Fees include professional services for the audit of our annual consolidated financial statements, reviews of the consolidated financial statements included in our Form 10-Q filings, audits of company provided employee benefit plans, and services that are normally provided in connection with statutory and regulatory filings or engagements. |
(2) | Audit-Related Fees comprise fees for professional services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements including review of the consolidated financial statements incurred in conjunction with registration statements. |
(3) | All other fees include amounts billed for consultation provided to the Company. |
Pre-Approval Policies and Procedures
The Audit Committee Charter provides that the Audit Committee is responsible for the appointment, compensation, retention and oversight of the Securities Exchange Actindependent public accountants, and pre-approves all audit services and permissible non-audit services to be provided to the Company by the independent public accountants. The Audit Committee may, in its discretion, delegate the authority to pre-approve all audit services and permissible non-audit services to the Chairman of 1934the Audit Committee provided the Chairman reports any delegated pre-approvals to the Audit Committee at the next meeting thereof. The Audit Committee has not, however, adopted any specific policies and procedures for the engagement of non-audit services.
The Audit Committee approved of PM performing our audit and all other consultation services provided for the 2019 and 2018 fiscal years as set forth in the table above.
Vote Required and Recommendation of Board
Proposal No. 2 requires the affirmative vote of a majority of the votes cast at the Meeting. If our stockholders fail to ratify the selection, it will be considered as a direction to the Board to consider the selection of a different firm. The Board considers PM to be well-qualified to serve as the independent auditor for the Company and PM has experience since 2010 in doing so. However, even if the selection is ratified, the Board, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF PM AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
PROPOSAL NO. 3
APPROVE AND ADOPT AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF COMMON STOCK
Background
On November 6, 2019 we received written notice (the "Exchange Act"“NYSE Notice”) requires Aspen's directors and officers and any persons who own more than ten
percent of Aspen's equity securities, to file reports of ownership and changesfrom the NYSE American LLC (the “NYSE American”) that we are not in ownershipcompliance with the Securities and Exchange Commission (the "SEC"). All
directors, officers and greater than ten-percent stockholders are required by
SEC regulation to furnish Aspen with copies of allcontinued listing standards set forth in Section 16(a) reports filed.
Based solely on our review of the copies of Forms 3, 4 and any amendments
thereto furnished to us during the fiscal year completed June 30, 2009 and
subsequently, we believe that during the period from July 1, 2009 through the
date of this Proxy Statement, all filing requirements applicable to our
officers, directors, and greater-than-ten-percent stockholders were complied
with.
16
Certain Relationships and Related Transactions and Director Independence
None of Aspen's directors are considered to be "independent" as defined by
Section 803A1003(a)(iii) of the NYSE AmexAmerican Company Guide inasmuch as eachGuide. The NYSE American has determined that the continued listing of the directors
has had material relationshipsCommon Stock is predicated on us having a minimum price for the Common Stock. In order to become into compliance with Aspen. The Board considers all relevant
facts and circumstances in its determination of independence of all membersthe continued listing standards, we are seeking to effect a reverse stock split of the Board.Common Stock. The following sets out information regarding transactions between
officers, directors, and significant stockholders of Aspen during the most
recent two fiscal years and during the subsequent fiscal year.
Working Interest Participation:
Some of the directors and officers of Aspen are engaged in various aspects
of oil and gas and mineral exploration and development for their own account.
AspenNYSE American has no policy prohibiting, nor does itsinformed us that we have until July, 2020 to demonstrate compliance.
Accordingly, our Board has approved proposed amendment (the “Amendment”) to our Certificate of Incorporation, prohibit, transactions between Aspenthat: would effect a share consolidation, or reverse stock split, of our outstanding Common Stock and its officersCommon Stock reserved for issuance, at an exchange ratio of not less than 1-for-10 (1:10) and directors.
Historically we entered into cost-sharing arrangements with respect tonot greater than 1-for-25 (1:25), as shall be determined in the drillingsole discretion of its oil and gas properties. Directors and officers (and other
employees) may participate (and from time to time have participated) in these
arrangements. All directors and executive officers participating in these
drilling opportunities must do sothe Board on the same basis as non-affiliated
participants, and consequently must share a proportional amountterms described in this proxy statement.
The number of Aspen's
promotional interest.
At June 30, 2008, R. V. Bailey (Aspen's chief executive officer and
chairmanauthorized shares of Common Stock, which is currently 100,000,000 shares, will not be affected by the reverse stock split. The number of authorized shares of our preferred stock, which is currently 10,000,000 shares, will not be affected by the reverse stock split.
The effectiveness of the Board)Amendment, and Robert A. Cohan (president and director), each had
working and royalty interests in certainthe implementation or abandonment of the California oilreverse stock split, if approved, will be determined by our Board following the Annual Meeting. Our Board has recommended that the Amendment be presented to our stockholders for approval.
If our stockholders approve Proposal 3 amending our Second Amended and gas
properties operated by Aspen including Johnson #11, #12 and #13Restated Certificate of Incorporation to enact the reverse stock split, our Board will have the sole discretion to elect, as it determines to be in the Johnson
Unit of the Malton Black Butte field and the Merrill #31-1 which are subject to
possible title deficiencies. Depending on the results of our analysis of these
deficiencies (which are described in more detail above), we may have overpaid
Messrs. Bailey and Cohan some amounts to the same extent (if at all) we may have
overpaid other working interest owners in the Johnson Unit of the Malton Black
Butte Field with respect to Johnson #11 and #12, and the Merrill #31-1 well.
Because we have not commenced production on Johnson #13, we have not made any
payments to working interest or royalty owners of that well. In addition, they
may have overpaid their share of the drilling costs of such wells.
At June 30, 2009, no director or officer of Aspen owned a working interest
in certain of the California oil and gas properties formerly operated by Aspen.
As of June 30, 2008 and 2009, workingbest interests of the Company and its affiliatesstockholders, whether to effect a reverse stock split and, if so, the number of shares of Common Stock within the stockholder-approved range (between 10 and 25 shares) which will be combined into one share of Common Stock. Our Board believes that stockholder approval of this range of reverse stock split ratios (as opposed to approval of a single reverse stock split ratio) provides the Board with maximum flexibility to achieve the purposes of a reverse stock split and, therefore, is in certain producing California properties are set forth below, as
compared to Aspen'sthe best interests in all of its wells:
Gross Wells Net Wells
Gas Gas
----------- ---------
As of June 30, 2008
Aspen Exploration 88 19.17
R. V. Bailey 67 2.14
R. A. Cohan 67 1.2
We did not grant any participatory rights in our Montana oil properties.
17
Amended Royalty and Working Interest Plan:
A discussion of Aspen's Amended Royalty and Working Interest Plant and the
specific royalties assigned to our executive officers is included in "Executive
Compensation" below.
Employment Agreements:
See the Executive Compensation disclosure and discussion in this Proxy
Statement -- Employment contracts and termination of employment and change in
control arrangements, for a discussion of the employment contracts between Aspen
and Messrs. Cohan and Bailey.
Consulting Fees and Other Compensation Arrangements
Mr. Imperato. Mr. Imperato was appointed to our Board of Directors in
December 2008, and has served as a Company consultant on an on-going basis. In
the past we paid Mr. Imperato consulting fees for services provided to the Company and have paid such fees during our 2009 fiscal year. These fees, paid
atits stockholders.
If, following stockholder approval of this proposal, the rate of $93.75 per hour during our 2009 fiscal year, amounted to $86,625
in fiscal 2009.
Mr. Imperato also had working and royaltyBoard determines that it is the best interests in certain of the California oilCompany and gas properties that were operatedits stockholders to effect the reverse stock split, the Board would determine the reverse stock split ratio (within the approved range) and authorize the filing of the applicable amendment to our Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware reflecting the reverse stock split. The text of the form of amendment to the Second Amended and Restated Certificate of Incorporation is set forth in Appendix A to this proxy statement. However, such text is subject to amendment to include such changes as may be required by the Companyoffice of the Secretary of State of the State of Delaware or as the Board deems necessary and advisable to effect the reverse stock split of the Common Stock.
If, following stockholder approval of this proposal, the Board elects to effect the proposed reverse stock split, then except for adjustments that may result from the treatment of fractional shares as described below, each stockholder will hold the same percentage of outstanding Common Stock immediately following the reverse stock split as such stockholder held immediately prior to the June 30, 2009 salereverse stock split. The par value of the Common Stock would remain unchanged at $0.005 per share.
Our Board does not intend for the reverse stock split transaction to Venoco. Duringbe the Company's fiscal year ended June 30,
2008 Mr. Imperato was paid $166,202first step in royaltiesa series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Reasons for the Reverse Stock Split
NYSE American Requirement for Continued Listing
Background: As a direct result of the NYSE Notice, our Board’s primary objective in asking for authority to effect a reverse stock split is to increase the per-share trading price of the Common Stock on the NYSE American.
As a result of this NYSE Notice, the Board believes that it is no longer a mere option for our stockholders to approve a reverse stock split, but a financial necessity. The only way to help continue our listing on the NYSE American is to effect a stock split that would sufficiently raise the trading price for a sustained period to avoid NYSE American delisting.
Potential Adverse Effects of Delisting: The Board has considered the potential harm to us of a delisting from NYSE American and $262,671believes that delisting from his working
interests. During fiscal year ended June 30, 2009 Mr. Imperato was paid $93,400the NYSE American would materially and adversely affect us, including as follows:
• we would be forced to seek to be traded on a less recognized or accepted exchange or market such as the OTC Bulletin Board or the “pink sheets;”
• the trading price of the Common Stock would be adversely affected, including an increased spread between the “bid” and “asked” prices quoted by market makers;
• the liquidity and marketability of shares of the Common Stock would be adversely affected, thereby reducing the ability of holders of the Common Stock to purchase or sell our shares as quickly and as inexpensively as they have done historically (if our stock is traded as a “penny stock,” transactions in royaltiesour Common Stock would be more difficult and $98,856cumbersome);
• our ability to access capital on terms favorable to us (or at all) would be adversely affected, as companies trading on the OTC Bulletin Board or “pink sheets” are viewed as less attractive investments with materially higher associated risks, such that existing or prospective institutional investors may be less interested in, or prohibited from, his working interests.
Mr. Imperato also entered into an agreement with Brian Wolf Oil & Gas
Properties ("Wolf"), who was engaged by the Company to assemble and operate the
Company data room and to assistinvesting in the sale of Aspen's properties. The agreement
between Aspen and Wolf required that Aspen pay Wolf 3%Common Stock (which may also cause the market price of the gross purchase
price forCommon Stock to decline);
• our relationships with vendors and customers may be adversely affected, as they may perceive our business less favorably, which would have a detrimental effect on our relationships with these parties.
Further, if we are required to move our Common Stock listing to the properties,OTC Bulletin Board, or “pink sheets,” we will no longer be deemed a “covered security” under Section 18 of the Securities Act, and as a result, Aspen paid Wolf $671,733.57. Wolf had
agreedwe will lose our exemption from certain state securities regulations. Among other things, this means that granting equity incentives to our employees will be more difficult.
Board Discretion to Implement the Reverse Stock Split
If the reverse stock split is approved by our stockholders at the Annual Meeting, the actual reverse stock split will be effected, if at all, only upon a subsequent determination by the Board that the reverse stock split (with the actual reverse stock split exchange ratio to be determined by the Board within the stockholder-approved range, as described above) is in the best interests of the Company and its stockholders at the time. Such determination will be based upon many factors, including existing and expected marketability and liquidity of the Common Stock, prevailing market conditions and the likely effect of the reverse stock split on the market price of the Common Stock. Notwithstanding approval of the proposed reverse stock split by the stockholders, the Board may, in its sole discretion, abandon the Amendment and determine prior to the effectiveness of any filing with the Delaware Secretary of State not to effect the reverse stock split. If the Board fails to implement the reverse stock split after stockholder approval, further stockholder approval would thereafter be required prior to implement any reverse stock split.
Effects of the Reverse Stock Split
Maintenance of Ownership Percentage: If the reverse stock split is approved and effected, each stockholder will own a reduced number of shares of Common Stock. This will affect all of our stockholders uniformly and would not affect any stockholder’s percentage ownership in the Company, except to the extent that the reverse stock split results in a stockholder owning a fractional share, a portionas described below. The number of this commission with Mr. Imperato,stockholders of record would not be affected by the reverse stock split.
Voting Rights: Proportionate voting rights and other rights of the holders of the Common Stock would not be affected by the reverse stock split, other than as a result paid Mr. Imperato $331,134. Mr. Imperato disclosed this compensation arrangementof rounding up each fractional share amount to the Companynext whole share amount, as described below. For example, a holder of 1% of the voting power of the outstanding shares of the Common Stock immediately prior to his appointmentthe reverse stock split would continue to hold 1% of the voting power of the outstanding shares of Common Stock after the reverse stock split, regardless of the exchange ratio chosen by the Board.
Equity Incentive Plans: All shares of the Common Stock subject to outstanding equity awards (including stock options and stock appreciation rights) under our 2016 Plan and our 2010 Plan (collectively, with the 2016 Plan, the “Plans”) and the number of shares of Common Stock which have been authorized for issuance under the Plans but as to which no equity awards have yet been granted or which have been returned to respective Plan pools upon cancellation or expiration of such equity awards, will be converted on the effective date of the reverse stock split in proportion to the Boardreverse split ratio of Directors,the reverse stock split (subject to adjustment for fractional interests). In addition, the exercise price of outstanding stock awards will be proportionately increased such that approximately the same aggregate price will be required to be paid after the reverse stock split as immediately preceding the reverse stock split. No fractional shares with respect to the shares subject to the outstanding equity awards (including stock options and stock appreciation rights) under our Plans will be issued following the reverse stock split. Therefore, if the number of shares subject to any outstanding equity awards under our Plans immediately before the reverse stock split is not evenly divisible (in other words, it would result in a fractional interest following the reverse stock split), the number of shares of Common Stock subject to such equity award (including upon exercise of stock options and stock appreciation rights) will be rounded up to the nearest whole number. This will result in an increase to the proportion of shares reserved for issuance under our Plans to the number of authorized shares of Common Stock following the reverse stock split.
As of May 5, 2020, there were options to purchase 1,460,667 shares outstanding, 926,666 options had been negotiated between Wolfexercised pursuant to the 2016 Plan, and Mr. Imperato several months before Mr. Imperato
was a director1,395,833 Restricted Stock Award shares outstanding under the 2016 Plan. As of Aspen.
Mr. Hensman. Mr. Hensman assumedMay 5, 2020, there were options to purchase 274,666 shares which remain outstanding under the role2010 Plan.
Summary Table Regarding the Effects of chief financial officerthe Reverse Stock Split
The following table contains approximate information relating to the Common Stock based upon Mr. Cohan's disability. Incertain reverse stock split ratios within the range that role, Aspen has been paying him consulting fees
at $70 per hoursubmitted for stockholder approval, and based on share information as disclosed aboveof May 5, 2020.
Pre-Reverse Split | Post-Split (1:10) | Post-Split (1:25) | |
Total Authorized Shares of Common Stock | 100,000,000 | 100,000,000 | 100,000,000 |
Outstanding Shares of Common Stock | 55,612,829 | 5,561,283 | 2,224,513 |
Treasury Stock | 103,600 | 10,360 | 4,144 |
Outstanding Stock Options and Warrants | 2,390,333 | 239,033 | 95,613 |
No fractional shares of the Common Stock will be issued in connection with the proposed reverse stock split. Holders of Common Stock who would otherwise receive a fractional share of Common stock pursuant to the reverse stock split will have their fractional shares rounded up to the nearest whole share amount, as explained more fully below.
The Common Stock is currently registered under Section 12(b) of the Exchange Act, and the Company is subject to the periodic reporting and other requirements of the Exchange Act. The reverse stock split would not affect the registration of the Common Stock under the Exchange Act. After the reverse stock split, the Common Stock would continue to be reported on the NYSE American under the symbol “ENSV.”
Certain Risks and Potential Disadvantages Associated with the Reverse Stock Split
If the reverse stock split is implemented, some stockholders may consequently own less than one hundred shares of the Common Stock. A purchase or sale of less than one hundred shares (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own less than one hundred shares following the reverse stock split may be required to pay modestly higher transaction costs should they then determine to sell their shares in the notesCompany.
The effect of the reverse stock split upon the market prices for the Common Stock cannot be accurately predicted. However, there is a risk of decreases in stock price performance in the near-term trading period after effectiveness of the reverse stock split. In particular, there is no assurance that the price per share of the Common Stock after the reverse stock split will increase in a manner directly proportionate to our reverse stock split ratio so as to cause our market capitalization (and the value of our stockholders’ respective Common Stock holdings) to remain the same. Further, there can be no assurance that the market price of the Common Stock immediately after the proposed reverse stock split will be maintained for any period of time. Even if an increased share price can be maintained, the reverse stock split may not achieve the other desired results which have been outlined above. Moreover, because some investors may view a reverse stock split negatively, there can be no assurance that approval of the reverse stock split will not adversely impact the market price of the Common Stock.
In addition, if the reverse stock split is implemented, we cannot assume nor conclude that the Common Stock will be more attractive to investors or that the liquidity of the Common Stock will increase since there would be a reduced number of shares outstanding after the reverse stock split.
Effective Date
If the proposed reverse stock split is approved at our Annual Meeting and the Board elects to proceed with a reverse stock split within the stockholder-approved range, the reverse stock split would become effective as of the filing (the “Effective Time”) of the applicable certificate of amendment to our Certificate of Incorporation with the office of the Secretary of State of the State of Delaware. Except as explained below with respect to fractional shares, at the Effective Time, all shares of the Common Stock issued and outstanding immediately prior thereto will be, automatically and without any action on the part of the stockholders, combined and converted into new shares of Common Stock in accordance with the reverse stock split ratio determined by the Board (within the approved range).
If the Board elects to effect a reverse stock split, before we file the amendment to our Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, we intend to issue a press release announcing the terms, including the reverse stock split ratio, as well as the effective date of the reverse stock split.
Exchange of Stock Certificates
As soon as practicable after the effective date of the reverse stock split, stockholders will be notified that the reverse stock split has been effected. Computershare will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the Summary Compensation
Tableexchange agent certificates representing pre-split shares in exchange for certificates representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal that will be delivered to our stockholders. No new certificates will be issued to a stockholder until the stockholder has surrendered to the exchange agent his, her or its outstanding certificate(s) together with the properly completed and executed letter of transmittal. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM FROM OUR EXCHANGE AGENT. STOCKHOLDERS ARE ENCOURAGED TO PROMPTLY SURRENDER CERTIFICATES TO THE EXCHANGE AGENT FOLLOWING RECEIPT OF TRANSMITTAL FORMS IN ORDER TO AVOID HAVING SHARES POSSIBLY BECOMING SUBJECT TO ESCHEAT LAWS.
Stockholders whose shares are held by their stockbroker do not need to submit old share certificates for exchange. These shares will automatically reflect the new quantity of shares based on the selected reverse stock split ratio. Beginning on the effective date of the reverse stock split, each certificate representing pre-split shares will be deemed for all corporate purposes to evidence ownership of post-split shares.
Treatment of Fractional Shares
In lieu of any fractional shares to which a holder of the Common Stock would otherwise be entitled as a result of the reverse stock split, we shall round up each such fractional shares to the nearest whole share amount. We expect that this will result in a slight increase in the Executive Compensation disclosure below.
Other Arrangements:
Duringoverall number of shares outstanding after the fiscal years 2009 and 2008, Aspen paid for various hospitality
functions and for travel, lodging and hospitality expenses for spouses who
occasionally accompanied directors when they were traveling on company business.
Management believes that the expendituressplit than if we were to Aspen's benefit.
elect payment of cash for fractional shares, but the effect on stockholders’ respective ownership percentages will be negligible.
Discretionary Authority of the Board to Abandon the Reverse Stock Split
The Board reserves the right to abandon the reverse stock split without further action by our stockholders at any time before the effectiveness of the Amendment, even if the reverse stock split has been authorized by our stockholders. By voting in favor of the reverse stock split, you are expressly also authorizing our Board to determine not to proceed with, and abandon, the reverse stock split, if it should so decide.
No Appraisal Rights
Under the Delaware General Corporation Law, our stockholders do not have a right to dissent and are not entitled to appraisal rights with respect to the proposed Amendment to effect the reverse stock split, and we will not independently provide our stockholders with any such rights.
Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a general summary of certain U.S. federal income tax consequences of the reverse stock split that may be relevant to U.S. Holders (as defined below) of the Common Stock, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws, are not discussed. This discussion is based on the Code, Treasury regulations promulgated thereunder (the “Treasury Regulations”), judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder of the Common Stock. We have not sought and will not seek an opinion of counsel or any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the reverse stock split.
This discussion is limited to U.S. Holders that hold the Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a U.S. Holder’s particular circumstances, including the impact of the alternative minimum tax and the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders subject to special rules, including, without limitation:
• U.S. expatriates and former citizens or long-term residents of the United States;
• U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;
• persons holding the Common Stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;
• banks, insurance companies, and other financial institutions;
• real estate investment trusts or regulated investment companies;
• brokers, dealers or traders in securities;
• corporations that accumulate earnings to avoid U.S. federal income tax;
• partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
• tax-exempt organizations or governmental organizations;
• persons deemed to sell the Common Stock under the constructive sale provisions of the Code;
• persons holding the Common Stock as “qualified small business stock” within the meaning of Section 1202 of the Code;
• persons subject to special tax accounting rules as a result of any item of gross income with respect to the Common Stock being taken into account in an “applicable financial statement” (as defined in the Code);
• persons who hold or receive the Common Stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
• tax-qualified retirement plans.
If an entity treated as a partnership for U.S. federal income tax purposes holds the Common Stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding the Common Stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THIS DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. U.S. HOLDERS OF THE COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
For purposes of this discussion, a “U.S. Holder” is any beneficial owner of the Common Stock that, for U.S. federal income tax purposes, is or is treated as any of the following:
• an individual who is a citizen or resident of the United States;
• a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;
• an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
• a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
The reverse stock split should constitute a tax-free “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the reverse stock split. A U.S. Holder’s aggregate tax basis in the shares of the Common Stock received pursuant to the reverse stock split should equal the aggregate tax basis of the shares of the Common Stock surrendered, and such U.S. Holder’s holding period in the shares of the Common Stock received should include the holding period in the shares of the Common Stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of the Common Stock surrendered to the shares of the Common Stock received pursuant to the reverse stock split. U.S. Holders of shares of the Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
Approval by the Stockholders of the Proposal
Approval of the proposal to approve and adopt the Amendment requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock on such proposal.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE AMENDMENT TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMMON STOCK.
CORPORATE GOVERNANCE
The Board is committed to sound and effective governance practices, which help us compete more effectively, sustain our success, and build long-term stockholder value. The Board reviews the Company's governance policies and business strategies, and advises and counsels the executive officers who manage the Company.
Meetings of the Board and Committees
Committees; Attendance at the Annual Meeting
The Board of directors held onefour formal meeting during the fiscal year ended
June 30, 2008 and six formalin-person or telephonic meetings during the fiscal year ended June 30,
2009. Each directorDecember 31, 2019 and acted by unanimous consent four times during 2019. The incumbent directors each attended all100% of the formalboard meetings either in person or by
telephone, without exception.held during 2019. In addition, regular communications were maintained throughout the year among all of the officers and directors of the Company.
Board members are not required to attend the annual stockholder meeting. The Company last held an annual meeting of stockholders on June 3, 2019, and six Board members were in attendance, either in person or telephonically.
Committees of the directors acted by unanimous consent six times during fiscal
2008, four times during fiscal 2009, and three times subsequently.
18
NoBoard
Audit Committee
The Board established the Audit Committee or Codeon May 29, 2013, in accordance with Section 3(a)(58)(A) of Ethics:
Aspen does notthe Exchange Act and then NYSE MKT Rule 803(B) as modified for smaller reporting companies by then NYSE MKT Rule 801(h). The Audit Committee was established to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements.
The members of our Audit Committee are Messrs. Herlin and Jolly. Mr. Herlin is chairman of the Audit Committee. On May 1, 2017, and each subsequent Audit Committee meeting thereafter, the Board determined that Mr. Herlin and Mr. Jolly were independent under SEC Rule 10A-3(b)(1) and NYSE American Rule 802(a). The Board has determined that all current members of the Audit Committee are “financially literate” as interpreted by the Board in its business judgment. No members of the Audit Committee have been qualified as an audit committee compensation committee,financial expert, as defined in the applicable rules of the SEC, because the Board believes that the Company’s status as a smaller reporting company does not require expertise beyond financial literacy. The Audit Committee held four meetings during the year ended December 31, 2019.
The Audit Committee meets quarterly with our independent accountants and management to review the scope and results of the annual audit and to review our financial statements and related reporting matters prior to the submission of the financial statements to the Board. In addition, the Audit Committee meets with the independent auditors at least on a quarterly basis to review and discuss the annual audit or quarterly review of our financial statements.
We have adopted an Audit Committee Charter that deals with the establishment of the Audit Committee and sets out its duties and responsibilities. The Audit Committee reviews and reassesses the adequacy of the Audit Committee Charter on an annual basis. The Audit Committee Charter is available on our Company website at http://www.enservco.com.
No Nominating Committee
Enservco has not established a nominating committee. Under the NYSE American Rule 804(a), if there is no nominating committee, or other committeenominations must be made by a majority of the independent directors. In accordance with this rule, the independent members of the Board that performs similar functions.
Instead, the entire Board acts as the Company's audit committee,are responsible for identifying and therefore,
Aspen does not have a designated audit committee financial expert.
Aspen's Board of Directors has not adopted a code of ethics because the
Board does not believe that, given the small size of Aspen and the limited
transactions, a code of ethics is warranted.
No Nominating Committee; Procedures by which Security Holders May Recommend
Nomineesnominating appropriate persons to the Board of Directors; Communications with Membersbecome members of the Board, as necessary. In identifying Board candidates, it is the Company's goal to identify persons who it believes have appropriate expertise and experience to contribute to the oversight of Directors:
As noted above, Aspen does not havethe Company, while also reviewing other appropriate factors. Enservco believes that this method of identifying, evaluating, and nominating members to join the Board is appropriate given Enservco's status as a nominating committee. We do not havesmaller reporting company for SEC purposes.
In order to comply with NYSE American rules, Enservco has adopted a nominating committee because ournomination procedure in its Bylaws by which eligible stockholders may nominate a person to the Board. Such procedure was amended by the Board on March 16, 2015. That procedure is as follows:
Enservco will consider all recommendations from any person (or group) who holds and has (or collectively if a group have) held more than 5% of Directors does not believe that such
a committee is necessary given our small size, and because we have not held an
Annual Meeting of stockholders since February 1994. Instead, when a board
vacancy occurs, the remaining board members participate in deliberations
concerning director nominees.
As required by Section 2.12 of Aspen's Bylaws, anyEnservco’s voting securities for longer than one year. Any stockholder who desires to submit a nomination of a person to stand for election of directors at athe next annual or special meeting of the stockholders meeting at which directors are to be elected must submit a notification of the stockholder'sstockholder’s intention to make a nomination ("Notification"(“Notification”) to Aspen at least 45 days prior toEnservco’s corporate secretary by the Annual Meetingdate mentioned in the most recent proxy statement or information statement under the heading “Proposal From Stockholders” as such date may be amended in cases where the annual meeting has been changed as contemplated in SEC Rule 14a-8(e), Question 5, and in that notification must provide the following additional information to Aspen:
1. Enservco:
Name, address, telephone number and other methods by which AspenEnservco can contact the stockholder submitting the Notification and the total number of shares beneficially owned by the stockholder (as the term "beneficial
ownership"“beneficial ownership” is defined in SEC Rule 13d-3);
2.
If the stockholder owns shares of the Company's voting stockEnservco’s Common Stock other than on the records of the Company,Enservco, the stockholder must provide evidence that he or she owns such shares (which evidence may include a current statement from a brokerage house or other appropriate documentation);
3.
Information from the stockholder regarding any intentions that he or she may have to attempt to make a change of control or to influence the direction of the Company,Enservco, and other information regarding the stockholder
or any other persons associated with the stockholder that would be required under Items 4 and 5 of SEC Schedule 14A were the stockholder or other persons associated with the stockholder making a solicitation subject to SEC Rule 14a-12(c); 4. Name, address, telephone number and other contact information of the
proposed nominee; and
5.
All information required by Item 7 of SEC Schedule 14A with respect to the proposed nominee, which shall be in a form reasonably acceptable to Enservco.
Compensation Committee
The Board established the Company.
Any stockholder desiring to communicate directly with any officer or
director of Aspen may address correspondence to that person at our officesCompensation Committee in Denver, Colorado. Our office staff will forward such communicationsNovember, 2017. The Board has appointed Messrs. Jolly, Herlin, and Murphy to the addressee.
19
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation awarded,
paid to, or earned by the chief executive officer and the other principal
officers of Aspen for the two years ended June 30, 2008 and 2009. No other
person who is currently an executive officer of Aspen earned salary and bonus
compensation exceeding $100,000 during any of those years. This includes all
compensation paid toCompensation Committee, each by Aspen and any Aspen subsidiary.
SUMMARY COMPENSATION TABLE
Non-Equity Non-Qualified
Stock Option Incentive Plan Deferred Plan All Other
Name and Fiscal Salary Bonus Awards Awards Compensation Compensation Compensation Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
------------------ ------ ------ ----- ------ ------ ------------ ------------ ------------ -----
R. A. Cohan, 2009 $ 80,000 $ - $ - $ - $ - $ - $ 24,523 $104,523
President and director 2008 $160,000 $ - $ - $71,563 $ - $ - $156,123 $387,686
R. V. Bailey, CEO 2009 $ 90,000 $ - $ - $ - $ - $ - $ 76,067 $166,067
and Chairman, 2008 $ 60,000 $ - $ - $50,957 $ - $ - $135,367 $246,324
Executive Vice
President
Compensation Discussion and Analysis
- ------------------------------------
The following Compensation Discussion and Analysis describes the material
elements of compensation for the executive officers identified in the Summary
Compensation Table contained above - being our chief executive officer (R.V.
Bailey ("CEO")), and President (Robert A. Cohan), the "named executive
officers."
As more fully described below, the board of directors (which includes the
named executive officers) acting in lieu of a compensation committee reviews the
total direct compensation programs for our CEO, and President. Notably the
salary and other benefits payable to our named executive officers are set forth
in employment agreements which are discussed below. The only discretionary
portion of the compensation is the options that may (in the discretion of the
board) be issued to the named executive officers.
Our CEO reviews the base salary, annual bonus and long-term compensation
levels for other employees of the Company. The entire Board of Directors remains
responsible for significant changes to, or adoption of, new employee benefit
plans.
Cash Compensation Payable To Our Named Executive Officers. Historically,
our named executive officers receive a base salary payable in accordance with
our normal payroll practices and pursuant to contracts between each of these
officers and Aspen (which contracts are described in more detail below), except
for Kevan Hensman, our Chief Financial Officer, who is compensated on an hourly
basis for services rendered. We believe that the base salaries as set forth in
the employment contracts were reasonable when entered into and were less than
those that are received by comparable officers with comparable responsibilities
in similar companies. Notably our chief executive officer and our president were
participants in our amended royalty and working interest plan discussed below.
Our chief financial officer did not participate in this plan. As described in
more detail below, Mr. Cohan's employment contract expired December 31, 2008 and
Mr. Bailey's contract will expire December 31, 2009.
20
In the future, when we reconsider salaries for our executives, we will do
so by evaluating their responsibilities, experience and the competitive
marketplace. More specifically, we expect to consider the following factors in
determining our executive officers' base salaries:
1. the executive's leadership and operational performance and potential
to enhance long-term value to the Company's shareholders;
2. performance compared to the financial, operational and strategic goals
established for the Company;
3. the nature, scope and level of the executive's responsibilities;
4. competitive market compensation paid by other companies for similar
positions, experience and performance levels; and
5. the executive's current salary, the appropriate balance between
incentives for long-term and short-term performance.
Unless the composition of our board of directors changes before that time,
however, the board considering these issues will not be independent. All of our
directors are employees, Company consultants, or named executive officers. Thus,
any compensation decisions made in the future are not likely to be at
arms'-length.
Stock Option Plan Benefits. Our officers and directors are eligible to be
granted options. Currently the Company only has one formal equity compensation
plan, (the "2008 Equity Plan").
Prior to the adoption of the 2008 Equity Plan Messrs. Cohan, Bailey, and
Hensman were granted option outside of that plan and own the following options
which are not subject to vesting criteria or termination in the event the
individual is no longer associated with Aspen.
Options Exercise Expiration
Outstanding Price Date
----------- ----- ----
Cohan 80,000 $2.67 January 1, 2010
Bailey 65,000 2.67 January 1, 2010
Hensman 10,000 3.70 September 11, 2011
The 2008 Equity Plan (consisting of 1,000,000 shares, options for 600,000
of which were granted to persons serving as our directors on February 28, 2008).
The 2008 Equity Plan provides for:
o a cashless exercise of the options granted (ss.7(d)(5) of the 2008
Equity Plan),
o "all Options theretofore granted to such Recipient but not theretofore
exercised shall terminate three months following the date the
Recipient ceased to be an employee, officer, advisor or consultant of
the Corporation" unless for "Cause," in which case the options
terminate immediately (ss.7(e) of the 2008 Equity Plan), and
o The continued exercisability of all options for one year following the
death or disability of the option holder (ss.7(f) of the 2008 Equity
Plan).
21
With respect to the options granted under the 2008 Equity Plan, one-third
of the options granted vested or expired as of September 30, 2008, one-third as
of September 30, 2009, and one-third as of September 30, 2010, in each case
based on Aspen achieving certain performance goals as reflected in its audited
financial statements and reserve report as of the fiscal year end immediately
preceding such date. To the extent they vest, the options expire February 27,
2013. The options are exercisable at $2.14 per share - well in excess of the
current market price. The following table sets forth the performance standards.
Actual Results
for year ended Goals for the Year Ended June 30,
Factors* Weight June 30, 2007 2009 2010
-------- ------ ------------- ---- ----
Total Barrels of Oil
Equivalent - Proved 30% 580,045 650,000 700,000
Present Value of Reserves
- - 10% Discount 25% $13,400,466 $15,140,000 $16,030,000
Production (Barrels of Oil
Equivalent) 30% 103,653 120,000 130,000
Net Income 15% $925,269 10% increase 10% increase
over prior year over prior year
* No factor may be valued more than 100%. Any factor that is less than
the 2007 base year will be weighted at zero.
At June 30, 2008, 90,600 options were earned by the named executive
officers based on performance conditions that were met, and 76,067 options
expired due to unmet conditions. The 90,600 options that were earned by the
named executive officers as of June 30, 2008 vested as of September 30, 2008.
166,667 options that were subject to the vesting requirements during the 2009
fiscal year were unearned during fiscal 2009 due to unmet conditions.
Specifically:
o Since the Venoco transaction closed on June 30, 2009, there will be no
reserve report for the fiscal year ended 2009. Thus the first two
conditions (55%) cannot be met.
o Since the transaction closed as of December 1, 2008, the third
condition (30%) was not met.
o The fourth condition (15%) was not met due to a net loss for the 2009
fiscal year.
Elements of "All Other Compensation." The amounts reflected in the column
labeled "other compensation" in the above Summary Compensation Table
predominately consist of compensation paid to the named executive officers from
our "Amended Royalty and Working Interest Plan" and from benefits received from
our 401(k) plan.
1. "Amended Royalty and Working Interest Plan"
Aside from their base salaries, the largest element of the compensation of
our executive officers is realized from our "Amended Royalty and Working
Interest Plan" (the "Plan") by which we have in the past, in our discretion,
assigned overriding royalty interests or other interests in oil and gas
properties or in mineral properties. This plan was intended to provide
additional compensation to Aspen's personnel involved in the acquisition,
22
exploration and development of Aspen's oil or gas or mineral prospects. In
addition to our executive officers, all of our employees are eligible to
participate in this Plan. In the fiscal years ended June 30, 2009 and 2008, Ms.
Shelton, our corporate office manager (and neither an officer nor a director of
Aspen), also participated in the Plan. Inasmuch as Aspen is not engaged in the
oil and gas industry at the present time, we do not expect any additional
assignments to be made under this plan.
The allocations for royalty under Aspen's "Royalty and Working Interest
Plan" for employees are based on a determination by management whether there is
any "room" for royalties in a particular transaction. In some specific cases
management may believe that an oil or gas property or project is sufficiently
burdened with existing royalties so that no additional royalty burden can be
allocated to our employees for that property or project. In other situations a
determination may be made that there are royalty interests available for
assignment to our employees. The determination of whether royalty interests are
available and how much to assign to employees (usually less than 3%) is made on
a case-by-case basis by Robert A. Cohan, president, and R. V. Bailey, our chief
executive officer and vice president, both of whom benefit from royalty
interests assigned. We never granted any overriding royalty interests in our
Montana oil properties (which properties we sold in February 2009).
During fiscal year 2008, we assigned to employees royalties on certain of
our propertiesthe Board has determined is independent pursuant to our Amended Royaltythe independence tests under the NYSE American Company Guide. The Compensation Committee is charged with reviewing and Working Interest Plan, as set
forth inapproving the following table. No assignments of overriding royalty interests
were made to employees during fiscal year 2009. At the time we assign these
overriding royalty interests, we considered the valueterms and structure of the royalties assigned
to be nominal since the assignments are made while the properties are
undeveloped and unproved, and before any wells or drilled or significant
exploratory work has been performed. The overriding royalty interests in these
properties granted to our named officers and our one additional (non-executive)
employee were as follows:
R.V. Bailey R.A. Cohan J.L. Shelton
----------- ---------- ------------
Assigned during the
2009 fiscal year percent percent percent
-- -- --
Assigned during the
2008 fiscal year:
Johnson Unit 13 1.260000 1.260000 0.480000
SJDD 11-1 1.360000 2.000000 0.640000
Delta Farms 10 0.816000 1.200000 0.384000
Eastby 1-1 0.906661 1.333325 0.426664
The following table sets forth the payments received during the years
stated by our named executive officers.
Payments Received During
Fiscal Year Ended June 30,
--------------------------
2009 2008
---- ----
Mr. Cohan $59,114 $145,873
Mr. Bailey $43,234 $102,927
23
These payments derive from royalties assigned to employees as described
above and the royalties that were assigned in prior years. Any monies realized
by our executive officers under the Amended Royalty and Working Interest Plan
are reflected in column labeled "All Other Compensation" in the Summary
Compensation Table.
2. Other Elements of Compensation and Benefits
Our executive officers also receive certain other benefits, although these
benefits do not constitute a large portion of their overall compensation. These
benefits are summarized below.
We have a Profit-Sharing 401(k) Plan which we adopted effective July 1,
1990. All employees are eligible to participate in this Plan immediately upon
being hired to work at least 1,000 hours per year and attained age 21. Aspen's
contribution (if any) to this plan is determined by the Board of Directors each
year.
We adopted an Amendment to the Profit-Sharing 401(k) Plan effective July 1,
2005 which states that Aspen will make matching contributions equal to 50%compensation of the participant's elective deferrals. During fiscal 2008, we contributed $30,250
to the plan ($10,000 to R. V. Bailey's plan; $10,250 to Robert A. Cohan's plan;
$10,000 to Judith L. Shelton's plan). During fiscal 2009, we contributed $25,125
to the plan ($10,000 to R. V. Bailey's plan; $5,125 to Robert A. Cohan's plan;
$10,000 to Judith L. Shelton's plan). When amounts are contributed to Mr.
Bailey's and Mr. Cohan's accounts (which amounts are fully vested), these
amounts are also included in the column labeled "All Other Compensation" in the
Summary Compensation table, above.
For the fiscal years ended June 30, 2009 and 2008, the Company had a policy
of reimbursing employees for medical expenses incurred but not covered by the
paid medical insurance plan. Expenses reimbursed for fiscal 2009 and fiscal 2008
were $22,833 and $24,108, respectively. As of June 30, 2009 and 2008 there were
no accruals for reimbursement of medical expenses. Under the terms of Mr.
Bailey's current employment agreement, he is responsible for his own medical
insurance premiums and will no longer be reimbursed excess medical expenses.
During the 2008 fiscal year Aspen provided one vehicle each to Messrs.
Bailey and Cohan. In fiscal 2009, Messrs. Bailey and Cohan purchased the
vehicles from the Company. Mr. Cohan purchased his vehicle from Aspen at fair
market value as determined in the used car market. Pursuant to Mr. Bailey's
September 2004 employment agreement, he purchased his vehicle from Aspen for
$500, significantly below the fair market value of that vehicle. The difference
between the purchase price paid by Mr. Bailey when he acquired his vehicle from
Aspen for $500 (pursuant to his September 2004 employment agreement) and the
fair market value of that vehicle ($31,500) is also included in "Other
Compensation" for Mr. Bailey.
3. Expense Reimbursement.
We have agreed to reimburse our officers and directors for out-of-pocket
costs and expenses incurred on behalf of Aspen. Since this reimbursement is on a
fully-accountable basis, there is no portion treated as compensation.
4. Purchases of Working Interests
As described in Item 1, above, when Aspen was actively operating its
California natural gas properties, Aspen generally did not incur all of the
expense and bear all of the risk in drilling its wells. Aspen generally sought
other participants who were familiar with the oil and gas industry and the wells
24
being drilled and retained a promotional interest. Oftentimes, our named
executive officers participate in these wells. When they did so, they purchased
working interests on the same basis as unaffiliated parties and bear their
proportionate share of Aspen's promotional interest. These investments by our
named executive officers are not considered to be compensatory since the named
executive officers are participating in the wells on the same basis as
unaffiliated parties.
5. Other
Mr. Cohan also served as a director during our fiscal year 2009 and was
compensated $4,000 for serving in that capacity. This amount is included in
"Other Compensation" above rather than added to the Director compensation table
below.
Employment Agreement with our Named Executive Officers. We have entered
into employment agreements with two of our namedCompany’s executive officers. The material terms of these agreements are summarized as follows:
Mr. Cohan: Aspen and Robert A. Cohan entered into an employment agreement
dated January 1, 2003, as amended on April 22, 2005 (the "Agreement"). The
Agreement was for an initialCompensation Committee held three meetings during the year term, was amended in April 2005, and
expired onended December 31, 2008. Under2019.
Pursuant to the Agreement we paid Mr. CohanNYSE American rules, the independent members of Enservco's Board determine the compensation of our Chief Executive Officer. The Board believes that this is appropriate given that Enservco is a smaller reporting company and these compensation decisions are made by the independent directors. The process and procedures for establishing executive compensation are discussed in the "Executive Compensation" and "Compensation of Directors" sections located elsewhere in this proxy statement.
We have adopted a Compensation Committee Charter that provides for the establishment of the Compensation Committee and sets out its duties and responsibilities. The Compensation Committee reviews and reassesses the adequacy of the Compensation Committee Charter on an annual salary of $160,000 and we offered Mr. Cohan health insurance, cost
reimbursement, and certain other benefits.
As reported in January 2008, Mr. Cohan suffered a stroke and was unable to
continue to perform his duties as chief executive officer and chief financial
officer of Aspen. As a result, these duties were assumed by Messrs. R.V. Bailey
and Kevan Hensman. As a result,basis. The Compensation Committee Charter is available on September 4, 2008, Aspen notified Mr. Cohan
that his employment agreement wouldour Company website at http://www.enservco.com.
Board Leadership Structure
The Board does not be renewed when it expired on December
31, 2008.
Mr. Bailey: Effective May 1, 2003, and as amended September 21, 2004, we
entered intohave an employment agreement with R. V. Bailey (the "2003 Agreement").
The pertinent provisionsexpress policy regarding the separation of the 2003 Agreement included an employment period
ending May 1, 2009, the titleroles of Vice President (although Mr. Bailey is now
servingChief Executive Officer and Board Chairman as our chief executive officer) and an annual salary of $60,000 per year
from January 1, 2007, ending May 1, 2009. Effective as of January 1, 2009, and
as amended July 21, 2009, we entered into a new employment agreement with Mr.
Bailey (the "2009 Agreement") pursuant to which both parties agreed that the
2003 Agreement was terminated as of January 1, 2009. The pertinent provisions of
the 2009 Agreement include an employment period ending December 31, 2009 with a
salary of $120,000 per year. The 2009 Agreement provides that Mr. Bailey is
eligible to participate in Aspen's stock options and royalty interest programs.
During the term of the agreement, and in lieu of health insurance, we have
agreed to pay Mr. Bailey a monthly allowance to cover such items as
prescriptions, medical and dental coverage for himself and his dependents and
other expenses not covered in the agreement. To the extent that Mr. Bailey does
not provide documentation accounting for the expenditure of this amount for
medical reimbursement purposes, it is treated as compensation to him. The
original monthly allowance was $1,700, but the agreement provided that it should
be adjusted each June for inflation. Currently the monthly allowance is $1,966.
We may terminate the 2009 Agreement upon Mr. Bailey's death by paying his
estate all compensation that had or will accrue to the end of the year of his
death plus $75,000. Should Mr. Bailey become totally and permanently disabled,
we will pay Mr. Bailey one half of the salary and benefits set forth in our
agreement with him for the remainder of the term of the 2009 Agreement. Aspen
may not terminate the 2009 Agreement for other reasons. The 2003 Agreement
terminated Aspen's obligations under a previous agreement by which it was
obligated to repurchase Mr. Bailey's stock upon his death.
25
Stock Options and Stock Appreciation Rights Granted During the Last Fiscal Year:
On February 27, 2008, the Board of Directors adopted the 2008 Equity Plan
(the "Plan"). 1,000,000 shares of common stock are reserved under the Plan for
the grant of stock options or issuance of stock bonuses to compensate new,
continuing, and existing employees, officers, consultants, and advisors of the
Company. Concurrent with the adoption of the Plan, the board granted options to
purchase 775,000 shares of common stock at an exercise price of $2.14 per share.
1/3 of the shares vest on each September 30, of 2008, 2009, and 2010 if certain
performance conditions are met. At June 30, 2008, 247,097 shares were earned,
based on performance conditions, and 117,902 expired. At June 30, 2009, no
shares were earned, based on performance conditions, and 258,333 expired.
The following table sets out the unexercised stock options, stock granted as
bonuses that have not vested, and equity incentive plan awards for each Named
Executive Officer outstanding at June 30, 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Equity Incentive
Market Plan Awards:
Number of Securities Number of Value of Number of
Underlying Unexercised Shares or Shares or Unearned
Options(1)(#) Units of Units of Shares, Units,
--------------------------- Option Option Stock That Stock That Other Rights
Exercise Expiration Have Not Have Not That Have Not
Name and Principal Position Exercisable Unexercisable Price ($) Date Vested (#) Vested ($) Vested (#)
- --------------------------- ----------- ------------- --------- ---- ---------- ---------- ----------
R. V. Bailey, 65,000 - 2.67 1/1/2010 - $ - -
CEO and Chairman 36,240 66,667 2.14 2/27/2013 66,667 60,000 66,667
Robert A. Cohan, 80,000 - 2.67 1/1/2010 - - -
President and Director 54,360 100,000 2.14 2/27/2013 100,000 90,000 100,000
Kevan Hensman, 10,000 - 3.70 9/11/2011 - - -
CFO and Director 18,120 33,333 2.14 2/27/2013 33,333 30,000 33,333
(1) On February 27, 2008, the Board of Directors adopted the 2008 Equity Plan
(the "Plan"). 1,000,000 shares of common stock are reserved under the Plan for
the grant of stock options or issuance of stock bonuses to compensate new,
continuing, and existing employees, officers, consultants, and advisors of the
Company.
(2a) On April 27, 2005, Mr. Bailey was granted an option to purchase 65,000
shares of our common stock at an exercise price of $2.67 per share. These
options vested over three years without performance criteria, and are now
entirely vested.
(2b) On February 27, 2008, Mr. Bailey was granted an option to purchase 200,000
shares of our common stock at an exercise price of $2.14 per share. 1/3 of the
shares vest on each September 30, of 2008, 2009, and 2010 if certain performance
criteria are met. At June 30, 2009, 36,240 were earned (based on the FY 2008
performance criteria), and 97,094 options expired (including 66,667 that expired
in fiscal 2009 as a result of meeting none of the performance criteria).
26
(3a) On February 27, 2008, Mr. Cohan was granted an option to purchase 300,000
shares of our common stock at an exercise price of $2.14 per share. 1/3 of the
shares vest on each September 30, of 2008, 2009, and 2010 if certain performance
criteria are met. At June 30, 2009, 54,360 were earned (based on the FY 2008
performance criteria), and 145,640 options expired (including 100,000 that
expired in fiscal 2009 as a result of meeting none of the performance criteria).
(3b) On April 27, 2005, Mr. Cohan was granted an option to purchase 80,000
shares of our common stock at an exercise price of $2.67 per share. These
options vested over three years without performance criteria, and are now
entirely vested.
(4a) On February 27, 2008, Mr. Hensman was granted an option to purchase 100,000
shares of our common stock at an exercise price of $2.14 per share. 1/3 of the
shares vest on each September 30, of 2008, 2009, and 2010 if certain performance
criteria are met. At June 30, 2009, 18,120 were earned (based on the FY 2008
performance criteria), and 48,546 expired (including 33,333 that expired in
fiscal 2009 as a result of meeting none of the performance criteria).
(4b) On September 11, 2006, Mr. Hensman was granted an option to purchase 10,000
shares of Aspen's common stock exercisable at $3.70. The option vested
immediately and is exercisable through September 11, 2011. These options vested
when granted.
Long Term Incentive Plans/Awards in Last Fiscal Year:
Except as described in our 401(k) plan, we do not have a long-term
incentive plan nor have we made any awards during the fiscal years ended June
30, 2009 or 2008.
Report on Re-pricing of Options/SARs:
We did not re-price any options or stock appreciation rights during the
fiscal years ended June 30, 2008, June 30, 2009, or subsequently.
Compensation of Directors
- -------------------------
Although we have not formally adopted a plan for the compensation of our
directors, in September 2006, upon his appointment as a director we issued Mr.
Hensman an option to purchase 10,000 share of our common stock at a price of
$3.70 per share, exercisable through September 11, 2011. In addition, we agreed
to pay Mr. Hensman $2,000 per meeting of the board of directors that he attends
in person or by telephone, and to reimburse him for any expenses that he may
incur in performing his duties as a member of the board of directors.
Subsequently, we offered the same compensation terms to Mr. Imperato (who became
a director in December 2008) and to Mr. Cohan (who ceased being an employee of
Aspen as of December 31, 2008). The fees earned by Messrs. Hensman and Imperato
for attending meetings in fiscal year 2009 are reflected in the Director
Compensation Table below. As a result of his appointment as chief financial
officer, Mr. Hensman is also receiving consulting fees from Aspen at the rate of
$70.00 per hour. Mr. Imperato, who was a consultant to Aspen even before his
appointment as a director, received consulting fees during FY 2009 at the rate
of $93.75 per hour which are reflected in note 2 to the Director Compensation
table, below.
Mr. Cohan also served as a director during our fiscal year 2008 but is not
reflected in the Director Compensation table below as all compensation received
by him is reflected in the Summary Compensation table.
27
We have no other arrangements pursuant to which any of our directors was
compensated during the fiscal year ended June 30, 2008 or 2009 for services as a
director.
DIRECTOR COMPENSATION
- -------------------------------------------------------------------------------------------------
Non-Equity Non-Qualified
Incentive Deferred
Fees Earned Stock Option Plan Compensation
or Paid Nonqualifed Awards Compensation on Earnings Total
Name in Cash Awards ($) ($) ($) ($) ($)
- ------------- ----------- ----------- ------ ------------ ----------- -----
Kevan Hensman $ 10,000 $ - $ - $ - $ - $ 10,000
Douglas Imperato $ 6,000 $ - $ - $ - $ - $ 6,000
(1) Mr. Hensman was appointed to our board of directors in September 2006 and
during our 2007 fiscal year was paid fees for attending board meetings and was
also granted an option to purchase 10,000 shares of our common stock upon his
appointment to our board of directors. In January 2008 Mr. Hensman was appointed
to serve as our chief financial officer. The line item above solely reflects
compensation paid to Mr. Hensman during fiscal 2009 in his capacity as a
director. In addition to the directors' fees that he received during fiscal 2009
Mr. Hensman received $9,520 in fees for services provided in his capacity as our
chief financial officer.
(2) Mr. Imperato was appointed to our board of directors in December 2008 and
during our 2009 fiscal year was paid fees for attending board meetings. The line
item above solely reflects compensation paid to Mr. Imperato during fiscal 2009
in his capacity as a director. In addition to the directors' fees that he
received, during its fiscal 2009, Aspen paid Mr. Imperato $86,625 in consulting
fees. On February 27, 2008, Mr. Imperato was granted an option to purchase
25,000 shares of our common stock at an exercise price of $2.14 per share. 1/3
of the shares vest on each of September 30, 2008, 2009, and 2010 if certain
performance criteria are met. At June 30, 2009, 4,530 were earned, based on the
performance criteria (FY 2008) and vested on September 30, 2008, and 12,136
expired.
Vote Required and Recommended
For Proposal 1, the four nominees for the Board of Directors receiving a
plurality of the votes cast will be elected to serve on the Board of Directors.
The Board of Directors of Aspen recommends that stockholders vote FOR each
of the four nominees for directors: Mr. Bailey, Mr. Cohan, Mr. Hensman, and Mr.
Imperato. Unless otherwise specified, the enclosed proxy will be voted "FOR"
each of the above listed nominees for the Board of Directors.
PROPOSAL TWO
APPROVAL TO GRANT THE BOARD OF DIRECTORS DISCRETIONARY AUTHORITY
TO DISSOLVE THE COMPANY
Proposal No. 2 is for the approval of a resolution granting Aspen's Board
of Directors the authority, in its discretion, to dissolve the Company. As a
result of the sale of the Company's interest in a Montana oil property in
February 2009 and the sale of the Company's California oil and gas properties
28
and assets in June 2009 the Company does not currently have any active business
operations. Although the Company is currently exploring other business
opportunities, as of September 15, 2009 the Company's discussions with third
parties have only been preliminary in nature. The Company intends to continue to
explore business opportunities with third parties. As we have not, and do not,
intend to limit what types of business opportunities we have or may pursue, if
we identify an appropriate business opportunity it may result in Aspen changing
its line of business although to date Aspen has, and intends, to focus its
search within the broad scope of the natural resources industry.
Reasons the Proposal for Possibly Dissolving the Company is Being Submitted for
Stockholder Approval
As a result of the sale of the Company's California and Montana oil and gas
properties and assets the Company currently has no material or revenue
generating operations. In order to gain approval for the sale of the California
properties, Aspen was required to seek stockholder approval. In complying with
the rules and regulations of the Securities and Exchange Commission relating to
the proxy statement process, one stockholder submitted a request that Aspen
request that its stockholders consider a dissolution proposal at the same time.
Although this had been discussed previously by Aspen's Board of Directors, the
Aspen Board was concerned about the complexity of such a lengthy proxy statement
and posed certain other objections to the inclusion of a dissolution proposal at
that time. Aspen also advised the stockholder that Aspen would submit a
dissolution proposal for consideration by stockholders at a meeting scheduled to
be held later in 2009. At that time, the stockholder withdrew his proposal and
the SEC completed its review process. Subsequently one other stockholder stated
in a filing submitted to the Securities and Exchange Commission on July 30, 2009
that if Aspen does not submit a proposal for dissolution to its stockholders at
the Annual Meeting he may take action to try to cause a change of control at
Aspen.
As noted, the Aspen Board had considered the possibility of dissolution
even before the stockholder proposal was presented, recognizing that following
the sale of its California assets Aspen would only have liquid assets and
immaterial other assets. Certain of the directors recognized that as a
publicly-held corporation with liquid assets and no business operations, Aspen
may have a value greater than the value of the cash. Nevertheless, the directors
have recognized that if a majority of Aspen's stockholders approve Proposal No.
2 at the Annual Meeting, the Board should exercise its business judgment in
determining whether to dissolve the corporation or to consider possible business
opportunities. In any event, the Board must exercise its authority to dissolve
Aspen by filing a certificate of dissolution with the Delaware Secretary of
State on or before December 31, 2010, or the authority to dissolve will be
revoked.
The Board of Directors will likely consider exercising that authority if no
other appropriate business opportunities are then identified by the Company. The
Board of Directors may deem it advisable to dissolve the Company should no other
appropriate business opportunities be identified because of the lack of income
producing assets Aspen owns and the significant costs associated with
maintaining the limited business operations while complying with the regulations
governing public companies.
Delaware law requires that stockholders approve and authorize the
dissolution of a corporation. As such, and for the reasons outlined above, Aspen
is submitting Proposal No. 2 to the stockholders.
29
Resolution to Possibly Dissolve the Company
At the meeting, the stockholders will be asked to consider the following
resolution for the dissolution and liquidation of the Company:
RESOLVED, that the Board of Directors hereby finds and determines thatbelieves it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has not designated a lead independent director. The roles of Chief Executive Officer and Chairman are presently separated, and Richard A. Murphy serves as the Chairman of the Board.
Board’s Role and the Role of the Audit Committee in Risk Oversight
While management is charged with the day-to-day management of risks that Enservco faces, the Board and Audit Committee are responsible for oversight of risk management. The Board and the Audit Committee have responsibility for general oversight of risks facing the Company. Specifically, the Audit Committee reviews and assesses the adequacy of Enservco’s risk management policies and procedures with regard to identification of Enservco’s principal risks, both financial and non-financial, and review updates on these risks from our Chief Financial Officer and Chief Executive Officer. The Audit Committee also reviews and assess the adequacy of the implementation of appropriate systems to mitigate and manage the principal risks.
Director Independence
The Company utilizes the definition of “independent director” as it is set forth in Section 803A(2) of the NYSE American LLC Company Guide. Further, the Board considers all relevant facts and circumstances in its stockholders thatdetermination of independence of all members of the Board (including any relationships). Based on the foregoing criteria, Messrs. Behrens, Haymons, Herlin, Jolly, and Murphy are considered independent directors and have been confirmed as such by the Board.
Further information regarding enhanced independence standards applicable to directors who serve on the Company's Audit Committee, and directors who participate in the determination of the compensation of our Chief Executive Officer, can be found in the Corporate Governance section elsewhere in this proxy statement, under the headings "Audit Committee" and "No Compensation Committee".
Board of Directors – Composition, Qualifications and Attributes; Board Diversity
The Company’s Board seeks to ensure that it is composed of members whose particular experience, qualifications, attributes, and skills, when taken together, will allow the Board to satisfy its oversight obligations effectively. The Company does not currently have a separate nominating (or similar) committee and, as further discussed above, given the authorityCompany’s small size, the Company does not yet believe such a committee is necessary. However, as the Company grows, it may consider establishing a separate nominating committee.
Under the NYSE American LLC Company Guide 804(a), if there is no nominating committee, nominations must be made by a majority of the independent directors. In accordance with this rule, the independent members of the Board are responsible for identifying and appointing appropriate persons to dissolvebecome members of the Board, as necessary. In identifying Board candidates, it is the Company's goal to identify persons who it believes have appropriate expertise and experience to contribute to the oversight of the Company, while also reviewing other appropriate factors. Enservco believes that this method of identifying, evaluating, and nominating members to join the Board is appropriate given Enservco's status as a smaller reporting company.
The Board does not have a formal diversity policy. The Board considers candidates that will make the Board as a whole reflective of a range of talents, skills, diversity, and experience.
Related Party Transactions Policy and Procedures
The Board has adopted a written policy that establishes a framework for the review and approval or ratification of transactions between the Company and hereby adoptsits related parties and/or their respective affiliated entities. We refer to this resolution pursuantpolicy as our "Related Party Transactions Policy". The Related Party Transactions Policy is available on our website at www.enservco.com.
Pursuant to Section 275this policy, "Related Parties" includes our executive officers and directors, any nominee for director, beneficial owners of 5% or greater of the Delaware
General Corporation LawCompany's voting securities, and the immediate family members any of the foregoing persons. An "Immediate Family Member" of a Related Party means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, or any person sharing a household with the Related Party, other than a tenant or employee.
A "Related Party Transaction" includes:
any transaction or relationship directly or indirectly involving a Related Party that would need to be disclosed under Item 404(a) of SEC Regulation S-K;
any material amendment or modification to an existing Related Party Transaction; and
any transaction deemed by the directors or the Company's legal counsel to be a Related Party Transaction.
Under the Related Party Transactions Policy, Related Party Transactions are prohibited, unless approved or ratified by the disinterested directors of the Company. A Related Party Transaction entered into without pre-approval is not invalid, unenforceable, or in violation of the policy, provided that such transaction is brought to the disinterested directors as promptly as reasonably practical after it is entered into, and such transaction is ratified.
The Company's executive officers, directors, and nominees for director are required to promptly notify the Board and the Company's legal counsel of any proposed Related Party Transaction. The Company's disinterested directors will review such transaction, considering all relevant facts and circumstances, including the commercial reasonableness of the terms, the benefit and perceived benefit (or lack thereof) to the Company, opportunity costs of alternate transactions, the materiality and character of the Related Party's direct or indirect interest, and the actual or apparent conflict of interest of the Related Party. The disinterested directors may not approve or ratify a Related Party Transaction unless they have determined that upon consideration of all relevant information, the proposed Related Party Transaction is in, or not inconsistent with, the best interests of the Company and its stockholders.
The following sets forth information regarding transactions between the Company (and its subsidiaries) and its officers, directors, nominees, and significant stockholders since January 1, 2018 or otherwise outstanding as of the Record Date.
Subordinated Loan Agreement entered into with Cross River Partners, L.P.
On June 28, 2017, the Company entered into a subordinated loan agreement (the "DGCL"“Subordinated Loan Agreement”) with Cross River Partners, L.P., ("Cross River"), which documents the Company’s obligations to Cross River with respect to the financial accommodations made to the Company by Cross River in connection with the Tenth Amendment to the Company Amended and Restated Revolving Credit and Security Agreement with PNC Bank. In connection with the Subordinated Loan Agreement, on June 28, 2017, the Company delivered two subordinated promissory notes to Cross River in the amounts of $1 million and $1.5 million, respectively (each a “Note”, collectively, the “Notes” and, together with the Subordinated Loan Agreement, the “Subordinated Loan Documents”). The Notes each have a maturity date of June 28, 2022 (the “Maturity Date”) and any other applicable
provisions therein, reservingbear interest at a fixed per annum rate of 10.0%.
On August 10, 2017, the Company entered into the Loan and Security Agreement with East West Bank (the "2017 Credit Agreement"), which replaced the 2014 Credit Agreement. In relation to the 2017 Credit Agreement, on August 7, 2017, Cross River entered into a subordination agreement with East West Bank. The Company began making quarterly payments of accrued interest under each Note on July 1, 2017 and will continue making such interest only payments until all of the Company’s obligations under the 2017 Credit Agreement have been satisfied. Once all of the Company’s obligations under the 2017 Credit Agreement have been satisfied, the Company will begin making quarterly payments of principal (based on an amortization schedule of 10 years) plus interest until the Maturity Date. On the Maturity Date, all amounts still outstanding under the Notes will become due and payable. The Company has the right to prepay the outstanding balance of all principal and interest of either or both Notes, in whole, subject to a prepayment penalty equal to the total interest that would have been due and payable on the next two quarterly payments following such prepayment.
In connection with the Subordinated Loan Agreement, on June 28, 2017, the Company issued Cross River two five-year warrants (the “Warrants”) to buy an aggregate total of 1,612,902 shares of the Common Stock at an exercise price of $0.31 per share, the average closing price of the Common Stock for the 20 day period ended May 11, 2017. These warrants were exercised on June 29, 2018. Proceeds from the exercise of the warrants in the amount of $500,000 were used to reduce the subordinated debt balance.
On November 11, 2019 Enservco and Cross River Partners, L.P. entered into an Amended and Restated Subordinated Loan Agreement that increased the principal of the subordinated debt by $500,000 from $2.0 million to $2.5 million and provided Cross River Partners with an additional five-year warrant, fully vested, to purchase 625,000 shares of the common stock at an exercise price of $0.20 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Enservco’s directors and officers and any persons who own more than ten percent of Enservco’s equity securities, to file reports of ownership and changes in ownership with the SEC. All directors, officers and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports filed. Based solely on our review of the copies of Forms 3, 4 and any amendments thereto furnished to us during the fiscal year completed December 31, 2019, we believe that during the Company’s 2019 fiscal year all of our named executive officers, directors, and greater than ten percent stockholders filed the required reports on a timely basis under Section 16(a) of the Exchange Act.
Code of Business Conduct and Whistleblower Policy
On July 27, 2010, our Board adopted a Code of Business Conduct and Whistleblower Policy (the “Code of Conduct”) which the Board updated on May 29, 2013. The Code of Conduct applies to all of our officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct establishes standards and guidelines to assist our directors, officers, and employees in complying with both the Company’s corporate policies and with the law and is posted at our website: www.enservco.com. Additionally, a copy of our Code of Conduct was filed as an exhibit to our Current Report on Form 8-K dated July 27, 2010 and the amended Code of Conduct was filed as an exhibit to a Current Report on Form 8-K dated May 29, 2013.
Insider Trading Policy
On June 22, 2016, our Board approved a new Insider Trading Policy. The Insider Trading Policy applies to all of our officers, directors, and employees. Our Insider Trading Policy is posted at our website: www.enservco.com. Additionally, a copy of our Insider Trading Policy was filed as an exhibit to our Current Report on Form 8-K dated June 22, 2016.
Policy on Trading Blackout Period
On August 16, 2013, our Board adopted the Company's Policy on Trading Blackout Periods; Benefits Plans; and Section 16 Reporting (the “Blackout Policy”), which the Board amended on June 25, 2015. The Blackout Policy applies to all of our officers, directors, and employees. Our Blackout Policy is posted at our website www.enservco.com. In addition, a copy of Blackout Policy was filed as an exhibit to our Current Report on Form 8-K, dated June 25, 2015.
Communications with Directors
Stockholders and other interested parties may communicate with any of our independent directors, including committee chairs, by using the following address:
Enservco Corporation
Board of Directors to
determine when and if to complete the dissolution
c/o Corporate Secretary
999 18th Street, Suite 1925N
Denver, CO 80202
The Corporate Secretary of the Company by
filing a certificate of dissolution with the Delaware Secretary of
State as required by the DGCL, and further reservingreviews communications to the Board of
Directors in its discretionindependent directors and forwards the communications to abandon the dissolutionindependent directors as appropriate. All such communications should identify the author as a stockholder and clearly state whether the intended recipients are all members of the Company,
withBoard or just certain specified individual directors. Our Corporate Secretary will make copies of all such communications and circulate them to the understanding that ifappropriate director or directors. Communications involving substantive accounting or auditing matters will be immediately forwarded to the dissolutionChair of the Company has not
been completed by filing a certificateAudit Committee. Communications that pertain to non-financial matters will be forwarded promptly to the appropriate committee. Certain items that are unrelated to the duties and responsibilities of dissolution with the
Delaware Secretary of State on or before December 31, 2010, the Board will not be deemedforwarded, such as: business solicitation or advertisements; product related inquiries; junk mail or mass mailings; resumes or other job related inquiries; spam and overly hostile, threatening, potentially illegal, or similarly unsuitable communications.
EXECUTIVE OFFICERS
The age, business experience, and current position of each person who currently serves as an executive officer of Enservco are as follows.
Ian E. Dickinson, Age 49 - Biographical information for Mr. Dickinson is provided in the section “Proposal No. 1 – Election of Directors” elsewhere in this proxy statement.
Marjorie Hargrave, age 56 - Ms. Hargrave previously provided consulting services to have madevarious companies in the decisionareas of finance, administration, accounting, risk mitigation, human resources, and investor relations from 2016 until joining the Company in 2019. Prior to abandonher consulting work, Ms. Hargrave served as Chief Financial Officer and Senior Vice President of Strategic Planning for CTAP, LLC, a privately held distributor of tubing and casing throughout the dissolutionUnited States, from 2010 to 2016. Ms. Hargrave also served as Chief Financial Officer of High Sierra Energy, LP, a start-up energy company that focused on midstream acquisitions, from 2005 to 2009. Ms. Hargrave’s previous experience also includes management and associate roles with Black Hills Corporation, Xcel Energy, and Merrill Lynch & Co. Ms. Hargrave earned a bachelor’s degree in economics from Boston University, and a master’s degree in economics from New York University.
Significant Employees
There are no significant employees of Enservco other than its executive officers named above.
EXECUTIVE COMPENSATION
The following table sets out the compensation received for the fiscal years ended December 31, 2019 and 2018 in respect to each of the Company.
Board Recommendation
A majorityindividuals who served as the Company’s executive officers at any time during the last fiscal year, as well as the Company’s two most highly compensated executive officers (collectively referred to herein as the “NEOs”). The table does not include transactions subsequent to December 31, 2019.
Name and Principal Position | Fiscal Year | Salary | Bonus and Other | Stock Awards (1) | Option Awards (2) | Non-Equity Incentive Plan Compensation (12) | Non-Qualified Deferred Plan Compensation | All Other Compensation (3) | Total | ||||||||||||||
Ian E. Dickinson | 2019 | $ | 285,000 | $ | 142,500 | $ | 138,732 | (5) | $ | 71,679 | (4) | $ | - | $ | - | $ | 23,985 | $ | 661,896 | ||||
CEO and President | 2018 | $ | 274,904 | $ | 75,000 | $ | 189,406 | $ | 71,679 | $ | 142,500 | $ | - | $ | 22,900 | $ | 776,388 | ||||||
| Marjorie Hargrave(8) | 2019 | $ | 92,462 | $ | - | $ | 155,100 | (9) | $ | - | $ | - | $ | - | $ | 4,643 | $ | 252,205 | |||||
| Chief Financial Officer | 2018 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Dustin Bradford (10) | 2019 | $ | 124,103 | $ | 61,250 | $ | - | $ | 3,551 | (11) | $ | - | $ | - | $ | 5,271 | $ | 194,175 | |||||
Former CFO and Treasurer | 2018 | $ | 170,385 | $ | 20,250 | $ | 187,680 | $ | 3,551 | $ | 61,250 | $ | - | $ | 19,874 | $ | 462,900 | ||||||
| Kevin Kersting (6) | 2019 | $ | 225,910 | $ | 78,750 | $ | 82,266 | $ | - | $ | - | $ | - | $ | 477 | $ | 387,403 | ||||||
| Former Chief Operating Officer | 2018 | $ | 129,808 | $ | - | $ | 306,360 | (7) | $ | - | $ | 78,750 | $ | - | $ | 146 | $ | 515,064 | |||||
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(1) Stock awards reflect the grant date fair of the awards determined in accordance with ASC Topic 718. The assumptions and methodologies used in the calculations of these amounts are set forth in Note 10 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019. Under generally accepted accounting principles, compensation expense with respect to stock awards granted to our executive officers is generally recognized over the vesting periods applicable to the awards. The SEC disclosure rules require that we present stock award amounts in the applicable row of the table above using the grant date fair value of the awards granted during the corresponding year (regardless of the period over which the awards are scheduled to vest).
(2) Amounts represent the calculated fair value of stock options granted to the named executive officers which vested during the year based on provisions of ASC 718-10, Stock Compensation. See Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion regarding assumptions used to calculate fair value under the Black-Scholes–Merton valuation model.
(3) Represents: (i) health, life, dental and vision insurance premiums; and (ii) matching contributions to the Company’s 401(k) plan incurred on behalf of Mr. Dickinson, Ms. Hargrave, Mr. Kersting, and Mr. Bradford.
(4) Amount represents the calculated grant date fair value of stock options to purchase 400,000 shares of Common Stock that vested during 2019.
(5) This award is subject to performance conditions. If the highest level of all conditions are met, the value of the award would be $227,430.
(6) Mr. Kersting was appointed our Chief Operating Officer on May 21, 2018.
(7) This award is subject to performance conditions. If the highest level of all conditions are met, the value of the award would be $414,000.
(8) Ms. Hargrave was appointed our Chief Financial Officer on July 24, 2019.
(9) This award is subject to performance conditions. If the highest level of all conditions are met, the value of the award would be $65,835.
(10) Mr. Bradford resigned as Chief Financial Officer on July 24, 2019.
(11) Amount represents the calculated grant date fair value of stock options to purchase 16,667 shares of Common Stock which vested during 2019.
(12) There were no executive bonuses paid relating to 2019. The 2018 bonus represents 2018 short-term incentive bonuses earned in 2018 and paid subsequent to 2018. Sixty percent of the incentive was based on achieving an EBITDA target, which was not met, 20% of the bonus was based on a safety target which achieved 50% of the target, and 20% of the bonus was discretionary which was paid out at twice the allocated percentage amount.
Narrative Disclosure to Summary Compensation Table
Compensation Committee. The Board established the Compensation Committee in November, 2017. The Board has appointed Messrs. Jolly, Herlin, and Murphy to the Compensation Committee, each of Directors did not reach a consensus on whetherwhom the Board would recommend to the stockholders approval of Proposal No. 2. One of
Aspen's directors recommends that the stockholders vote against the proposal,
and three directors did not make any recommendation with regard to the proposal.
R.V. Bailey, the Company's Chairman and Chief Executive Officer believes
that the Company should continue to explore potential business opportunities.
Based on conversations with various advisors, and preliminary discussions with
third parties, Mr. Bailey believes that Aspen, as a company submitting reportshas determined is independent pursuant to the Securitiesindependence tests under the NYSE American Company Guide. The Compensation Committee reviews and Exchange Act of 1934approves the terms and with an existing
stockholder base, can offer value to third parties in potential business
transactions. He believes this value may be enhanced because after the
distribution to be made to stockholders from the proceedsstructure of the salecompensation of the Company's California assets Aspen will retain a portionCompany’s executive officers.
The Company considers various factors when evaluating and determining the compensation terms and structure of its existing cashexecutive officers, including the following:
1. The executive's leadership and cash equivalent assets. Public shell companies potentially have value in mergeroperational performance and business combination transactions in excess of the value of their cash
assets. Mr. Bailey believes the Company can minimize its expenditures while
trying to identify an appropriate business opportunity or transaction. As such,
Mr. Bailey believes that Aspen likely will be able to identify a business
opportunity that will offer Aspen's stockholders potential long term value. Mr.
Bailey believes that this long term value has the potential to exceed the value
offered to stockholders through the dissolution process. Therefore, Mr. Bailey
believes that it is not in Aspen's or its stockholders' best interest to
dissolve the Company, he recommends stockholders vote against Proposal No. 2,
and has informed the Board of Directors that he intends to vote against Proposal
No. 2.
Messrs. Cohan (President and director), Hensman (Chief Financial Officer
and director) and Imperato (director) are continuing to evaluate whether they
believe the Company can identify and execute on a business opportunity that may
offer long termenhance long-term value to the Company's stockholders, and as such neither has yet
reached a conclusion on whether Proposal No. 2 should be submitted to the
stockholders with or without a recommendation. Although Messrs. Hensman,
Imperato, and Cohan do not believe the Company should engage in an open ended
search for a business opportunity or transaction, they believe that subject to
thestockholders;
2. The Company's financial resources, results of operations, and financial projections;
3. Performance compared to the financial, operational, and strategic goals established for the Company;
4. The nature, scope, and level of the executive's responsibilities;
5. Competitive market compensation paid by other companies for similar positions, experience, and performance levels; and
6. The executive's current salary, the appropriate balance between incentives for long-term and short-term performance.
Company management is responsible for reviewing the base salary, annual bonus and long-term compensation levels for other Company employees, and the Company expects this practice to continue going forward. The entire Board remains responsible for significant changes to, or adoption, of new employee benefit plans.
The Company believes that the compensation environment for qualified professionals in the near term should continueindustry in which we operate is competitive. In order to attempt to identify a business opportunity or transaction. Ascompete in this environment, the compensation of our executive officers is primarily comprised of the datefollowing four components:
■ Base salary;
■ Annual short-term incentive plan compensation (cash bonus awards);
■ Long-term incentive compensation (equity awards); and
■ Other employment benefits.
Base Salary
Base salary, paid in cash, is the first element of this Proxy Statement Messrs. Hensman, Cohan and Imperato have not informedcompensation to our officers.In determining base salaries for our key executive officers, the Company whether each intendsaims to support or oppose Proposal No. 2.
30
While,set base salaries at a level we believe enables us to hire and retain individuals in a competitive environment and to reward individual performance and contribution to our overall business goals. The Board believes that base salary should be relatively stable over time, providing the executive a dependable, minimum level of compensation, which is approximately equivalent to compensation that may be paid by competitors for persons of similar abilities. The Board believes that base salaries for our executive officers are appropriate for persons serving as executive officers of Directors as a whole does not currently have any
immediate plans to dissolve the Company,public companies similar in size and certain of the Board members do not
recommend that Proposal No. 2 be approved, the Board of Directors believes it is
appropriate to submit a proposalcomplexity similar to the Company's stockholders that, if
approved, would give the Board the authority to dissolve the Company should the
Board of Directors be unable to identify an appropriate business opportunity or
corporate transactionCompany.
The Company’s named executive officers (being Messrs. Dickinson and later believe it is in the Company's best interests to
do so.
Principal Provisions of a Plan of Liquidation Should the Company Be Dissolved
Should the Company be dissolved, such dissolution will follow a plan of
liquidation, which will be approved and adopted by the Board of Directors at a
later date. The material features of a plan of liquidation are summarized below.
This summary does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by the plan of liquidation
that is ultimately approved and adopted by the Board of Directors.
Once a plan of liquidation is effective, the steps below will be completed
at such times as our Board of Directors, in its absolute discretion, deems
necessary, appropriate or advisable. A certificate of dissolution will be filed
with the State of Delaware pursuant to Section 275 of the Delaware General
Corporation Law ("DGCL"). Our dissolution will become effective, in accordance
with Section 275 of the DGCL, upon proper filing of the certificate of
dissolution with the Secretary of State of Delaware (the "Dissolution Date").
Pursuant to the DGCL, we will continue to exist for three years after the
Dissolution Date or for such longer period as the Delaware Court of Chancery
shall direct, for the purpose of prosecuting and defending suits, whether civil,
criminal or administrative, by or against us, and enabling us to settle and
close our business, to dispose of and convey our property, to discharge our
liabilities and to distribute to our stockholders any remaining assets, but not
for the purpose of continuing the business for which we were organized.
Moreover, we will continue after such period for the purpose of pending legal
actions.
From and after the Dissolution Date, we will not engage in any business
activities except to the extent necessary to preserve the value of our assets,
wind down our business and affairs, and distribute our assetsHargrave) receive base salaries in accordance with the planterms of liquidation and pursuant to Section 278 of the DGCL.
Our officers will negotiate and consummate the sales of alltheir respective employment agreements (which are described below).
Cash Bonuses
Historically, discretionary cash bonuses were another element of our remaining assetscompensation plan. These discretionary cash bonuses provided executive officers and properties insofarother employees with the potential to receive a portion of their annual cash compensation as our Board of Directors deems such
sales necessary, appropriate or advisable. It is not anticipated that any
further stockholder votes will be solicited with respecta cash bonus in order to the approval of the
specific terms of any particular sales of assets approved by our Board of
Directors. Such liquidation of our assets will be in accordance with any
applicable provision of the DGCL, including Sections 280 or 281.
If the Company is dissolved, we may, from timeencourage performance to time, make liquidating
distributions of our remaining funds and unsold assets, if any, in cash or in
kind, to the holders of record of shares of our common stock at the close of
business on the Dissolution Date. Such liquidating distributions, if any, will
be made to the holders of shares of our common stock on a pro rata basis; all
determinations as to the time for and the amount and kind of distributions will
be made by our Board of Directors, in its absolute discretion. No assurances can
be given that available cash and amounts received on the sale of assets will be
adequate to provide for our obligations, liabilities, expenses and claims,achieve key corporate objectives and to make anybe competitive from a total remuneration standpoint. We did not establish a set formula for determining or awarding discretionary cash distributionsbonuses to our stockholders. Thus, our Board of Directors
is currently unableother executives or employees. In determining whether to predict the precise nature, amount or timing of any
31
distributions. The actual nature, amount and timing of all distributions will be
determined by our Board of Directors, in its discretion, and will depend in part
upon our ability to convert our remaining assets into cash and pay and settle
our remaining liabilities and obligations.
If the Board of Directors elects to dissolve the Company, our Board of
Directors believes that we will have sufficient assets to pay our current and
future obligations and to consider making distributions to our stockholders, but
there can be no assurance to that effect. The amount of any distributions will
depend on a number of factors, including, but not limited to, the accounts
payable and our other liabilities existing on the date of the approval and
adoption of the plan of liquidation, our operating expenses that accrue
following approval and adoption of the plan of liquidationaward bonuses and the amount of any claimsbonuses, we have taken and expect to continue to take into consideration discretionary factors such as the individual’s current and expected future performance, level of responsibilities, retention considerations, and the total compensation package, as well as the Company’s overall performance including cash flow and other operational factors.
In 2018, we adopted the 2018 Short Term Incentive Plan (“2018 STIP”) in order to motivate and reward our named executive officers for meeting or exceeding corporate performance goals. Under the 2018 STIP, the Compensation Committee set target opportunities of 100% of base salary for our CEO, and 70% of base salary for our CFO and COO. The Compensation Committee also determined that may60% of the total cash incentive bonus for each named executive officer should be asserted against us.based on the Company’s attainment of a threshold ratio of EBITDA to debt, 20% should be based on the Company’s achievement of certain safety goals, and 20% should be discretionary at the discretion of the Compensation Committee, in each case subject to the Compensation Committee’s further adjustment in order to realign with corporate goals.
In reviewing the performance of the Company for 2019, the Compensation Committee determined that cash bonus awards would not be paid out for 2019. This determination was based on the Compensation Committee’s evaluation of corporate objectives during 2019.
Equity-Based Compensation
Each of the Company’s executive officers are eligible to be granted awards under the Company’s equity compensation plans. The expensesCompany believes that equity-based compensation helps align management and executives’ interests with the interests of our operations will
include professional fees and other expensesstockholders. Our equity incentives are also intended to reward the attainment of liquidation. In addition, the
actual amount, if any,long-term corporate objectives by our executives. We also believe that grants of equity-based compensation are necessary to enable us to be received by stockholders upon dissolution will
depend uponcompetitive from a total remuneration standpoint. At the present time, we have one active equity incentive plan for our management and employees, the 2016 Stock Incentive Plan (the "2016 Plan"), and one dormant equity incentive plan for our management and employees, the 2010 Stock Incentive Plan (the "2010 Plan"), pursuant to which there are still outstanding awards.
Historically, in determining whether to grant awards and the amount of any accrual we may have to make for contingent liabilities or
contractual claims (if any).
As of June 30, 2009,awards, the Company had accrued unpaid liabilitiestook into consideration discretionary factors such as the individual’s current and expected future performance, level of approximately $2,341,315,responsibilities, retention considerations, and the total assetscompensation package. In 2018, the Company adopted the Long-Term Incentive Plan (“2018 LTIP), which is intended to balance the short-term orientation of approximately $11,817,419. other compensation elements, further align management and shareholder interests, focus named executive officers on achievement of long-term results, and retain executive talent. The Company’s named executive officers and senior managers are eligible to receive awards under the 2018 LTIP. All awards granted under the 2018 LTIP are made pursuant to the 2016 Plan. Awards granted during 2019 under the 2018 LTIP contain the following terms: (i) 60% shall vest upon the Common Stock achieving a 90-day moving average price of at least $1.85 per share and (ii) 40% shall vest upon the Company achieving a ratio of trailing twelve-month debt to EBITDA ratio of 1.50 to 1.0. Awards granted in 2018 under the 2018 LTIP contain the following terms: (i) 60% shall vest upon the Common Stock achieving a 90-day moving average price of at least $2.25 per share and (ii) 40% shall vest upon the Company achieving a ratio of trailing twelve-month debt to EBITDA ratio of 1.50 to 1.0.
The Company intendshas granted restricted stock and stock options to distribute substantially all of the net, after-tax proceeds
from the saleeach of its California assetsexecutive officers as described above in the table entitled “Security Ownership of Management, Directors, and Certain Beneficial Owners” and below in the table entitled “Stock Options, Stock Awards, and Equity Incentive Plans.”
Forfeiture and Grant of Stock Options
The Compensation Committee granted restricted stock awards to our stockholders, once that figure can
be definitively determined (which is expected to be in early November 2009 withMr. Dickinson, Ms. Hargrave, and Mr. Kersting for fiscal year 2019 under the distribution likely being paid in December 2009). After this distribution2016 Plan. On June 14, 2018 the Company's cashCompensation Committee approved granting Mr. Dickinson 570,000 shares of restricted stock, and cash equivalent assets will likely be approximately $2.3
million. If the Company initiates the dissolution process the Company expects it
would reduce its liabilities and cash and other liquid assets to zeroMr. Kersting 330,000 shares of restricted stock, however, Mr Kersting forfeited his unvested restricted shares in connection with his resignation. In conjunction with her employment agreement, on July 23, 2019 Ms. Hargrave was granted 330,000 shares of restricted stock.
On June 14, 2018 the winding downCompensation Committee approved granting Mr. Dickinson 225,000 shares of restricted stock, Mr. Kersting 300,000 shares of restricted stock, and Mr. Bradford 175,000 shares of restricted stock.
Other Compensation/Benefits
Another element of the overall compensation is through providing our executive officers various employment benefits, such as the payment of health and life insurance premiums on behalf of the executive officers. Our executive officers are also eligible to participate in our 401(k) plan on the same basis as other employees and the Company historically has made matching contributions to the 401(k) plan, including for the benefit of our executive officers.
Declared Discretionary Bonuses
As indicated above, during 2019, the Board did not award any discretionary bonuses to the executive officers. During 2018, the Board awarded discretionary bonuses to Messrs. Dickinson, Kersting, and Bradford as shown in the Summary Compensation Table above.
Employment Agreements
We have entered into employment agreements with Mr. Dickinson and Ms. Hargrave. We previously entered into employment agreements with Messrs. Bradford and Kersting.
Ian E. Dickinson – Mr. Dickinson is Chief Executive Officer and President of the Company. Mr. Dickinson entered into an employment agreement effective May 9, 2017 (the “Dickinson Employment Agreement”). Pursuant to the Dickinson Employment Agreement, Mr. Dickinson receives an annual base salary of $285,000 and is eligible each year to receive a discretionary bonus in addition to his base salary, which will be awarded in such amounts as the Board may determine. Mr. Dickinson was also granted stock options to purchase 1,200,000 shares of Common Stock. The exercise price of the stock options is $0.30 per share. The stock options vest in one third installments, the first of which vested on May 9, 2017, the second of which vests on May 9, 2018 and the third of which vested on May 9, 2019, provided that Mr. Dickinson continues to be employed by the Company on those dates. The Dickinson Employment Agreement provides for severance compensation if Mr. Dickinson is terminated without cause or upon a change of control. The Dickinson Employment Agreement also contains other standard provisions contained in agreements of this nature, including confidentiality and non-competition provisions as well as eligibility for discretionary bonuses and long-term incentive awards.
Marjorie Hargrave - Ms. Hargrave is the Chief Financial Officer of the Company. Ms. Hargrave entered into an employment agreement effective July 24, 2019 (the "Hargrave Employment Agreement" Pursuant to the Hargrave Employment Agreement, Ms. Hargrave receives an annual base salary of $230,000. In addition, Ms. Hargrave is eligible each year to receive a discretionary bonus in addition to her base salary, which will be awarded in such amounts as the Board will determine. Ms. Hargrave was also granted 330,000 restricted shares of common stock (the “Restricted Shares”), half of which are time-vested, and half of which are performance-vested. The time-vested Restricted Shares will vest in one-third installments on each of January 23, 2020, January 23, 2021, and January 23, 2022, provided that Ms. Hargrave continues to be employed by the Company on those dates. The performance-vested Restricted Shares are subject to two performance metrics: (i) 99,000 Restricted Shares will vest upon the Company achieving a 90-day moving average stock price of at least $1.85 per common share, adjusted for stock splits, and (ii) 66,000 Restricted Shares will vest upon the Company achieving a ratio of Trailing Twelve Month EBITDA to Consolidated Debt of 1.0 to 1.5, in each case subject to Ms. Hargrave’s continued employment with the Company. The Hargrave Employment Agreement provides for severance compensation if Ms. Hargrave is terminated without cause or upon a change of control. The Hargrave Employment Agreement also contains other standard provisions contained in agreements of this nature, including confidentiality and non-competition provisions as well as eligibility for discretionary bonuses and long-term incentive awards.
Kevin Kersting – Mr. Kersting was the Chief Operating Officer of the Company. Mr. Kersting entered into an employment agreement effective May 21, 2018 (the "Kersting Employment Agreement). Pursuant to the Kersting Employment Agreement, Mr. Kersting received an annual base salary of $225,000 and was eligible each year to receive a discretionary bonus. Mr. Kersting resigned from the Company, effective February 14, 2020.
Dustin Bradford – The Company and Dustin Bradford entered into an Employment Agreement on April 23, 2018, effective January 31, 2018 (the “Bradford Employment Agreement”). Pursuant to the Bradford Employment Agreement, Mr. Bradford received an annual base salary of $175,000.
Effective July 24, 2019, Dustin Bradford resigned as Chief Financial Officer and all other positions he held with the Company and its subsidiaries.
In connection with Mr. Bradford’s resignation, the Company entered into an Executive Severance and Consulting Agreement with Mr. Bradford (the “Severance Agreement”) under which he continued to be employed by the Company in an advisory role, and his employment terminated on August 16, 2019. In addition, until September 30, 2019, Mr. Bradford provided financial consulting services for the Company and was paid $43,750.
The Severance Agreement contains other standard provisions contained in agreements of this nature including restrictive covenants concerning confidentiality, non-competition, non-solicitation and non-disparagement, and a general release of any and all claims Mr. Bradford may have against the Company, its directors, officers and associated persons.
Stock Options, Stock Awards, and Equity Incentive Plans
In accordance with the Company’s stock incentive plans the Company granted certain of its business.
Federal Securities Laws Reporting Obligations
As a resultexecutive officers restricted share awards during the Company's 2019 and 2018 fiscal years. The 2016 Plan was approved by stockholders on September 29, 2016.
The following table sets forth the outstanding equity awards for each named executive officer at December 31, 2019 and does not include transactions subsequent to December 31, 2019 as set forth in the footnotes to the table.
| Option Awards | Stock Awards | |||||||||||||||||||||||
| Number of Securities |
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| Equity Incentive Plan | Equity Incentive Plan | |||||||||||||||
| Underlying Unexercised |
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|
|
|
| Number of Shares | Market Value of | Awards: Number of | Awards: Market or Payout | |||||||||||||
| Options(1) |
|
| Option |
| Option | or Units | Shares or Units | Unearned Shares, Units or | Value of Unearned Shares | ||||||||||||||
|
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|
| Exercise |
| Expiration | of Stock That | of Stock That | Other Rights That | Units or Other Rights | |||||||||
Name | Exercisable |
|
| Unexercisable |
|
| Price |
| Date | Have Not Vested | Have Not Vested | Have Not Vested | That Have Not Vested | |||||||||||
|
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|
|
|
|
|
| ||||||||||||
Ian E. Dickinson | 1,200,000 | - | (2) | $ | 0.30 | 06/02/2022 | - | $ | - | - | $ | - | ||||||||||||
| $ | 225,000 | (7) | $ | 189,405 | (4) | |||||||||||||||||||
| 570,000 | (7) | 138,732 | (6) | |||||||||||||||||||||
| 795,000 | 328,137 | |||||||||||||||||||||||
| Marjorie Hargrave | 165,000 | (3) | 77,550 | 165,000 | (7) | 77,550 | (9) | |||||||||||||||||
| Kevin Kersting | $ | 66,667 | (5) | 24,667 | 200,000 | (7) | 74,000 | (8) | ||||||||||||||||
| 338,000 | (7) | 82,266 | (10) | |||||||||||||||||||||
| 538,000 | 156,266 | |||||||||||||||||||||||
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(1) | Consists of options granted under 2010 Plan and 2016 Plan. | |
(2) | Represents options to purchase shares under the 2016 Plan. These shares are vested. | |
| (3) | Represents restricted stock awards issued effective July 24, 2019 vest ratably over a three-year term on January 23, 2020, 2021, and 2022. | |
| (4) | Represents restricted stock awards with a market value of $40,500 based on the closing stock price on December 31, 2019 of $0.18. | |
| (5) | Represents unvested restricted stock awards. | |
| (6) | Represents restricted stock awards with a market value of $102,600 based on the closing common stock price on December 31, 2019 of $0.18 per share. | |
| (7) | Represents performance-based restricted stock awards that have not yet been earned. | |
| (8) | These are performance-based restricted stock awards with a market value of $36,000 based on the closing stock price on December 31, 2019. | |
| (9) | Represents restricted stock awards with a market value of $29,700 based on the closing common stock price on December 31, 2019 of $0.18 per share. | |
| (10) | Represents restricted stock awards with a market value of $60,840 based on the closing common stock price on December 31, 2019 of $0.18 per share. |
Risks of Compensation Programs
The Company’s equity-based compensation is performance-based in that the issued stock options become valuable as the stockholders’ returns (measured by stock price) increase. Furthermore, in all cases, options granted to the Company’s employees include time-based vesting. The Company believes that this vesting, coupled with the internal controls and oversight of the salerisk elements of our California assets to Venoco we do not
currentlyits business, have any active business operations. However,minimized the possibility that the compensation programs and practices will have a material adverse effect on the Company still hasand its financial, and operational, performance.
COMPENSATION OF DIRECTORS
Each member of the Board receives a classquarterly director fee of $7,000. Directors who are members of the Board's Audit Committee receive an additional fee of $1,500 per quarter. As chair of the Audit Committee, Mr. Herlin receives an additional fee of $3,000 per quarter. As chair of the compensation committee, Mr. Jolly receives an additional $2,500 per quarter. Mr. Dickinson is an employee of the Company and is not paid for his service as a member of the Board.
The table below reflects compensation paid to the non-employee members of the Board during the year ended December 31, 2019:
Fees | ||||||||||||||||
Earned or | Options | All Other | ||||||||||||||
Paid in | Awards | Compensation | ||||||||||||||
Director | Cash | (1) | Awards | Total | ||||||||||||
Christopher D. Haymons (2) | $ | 32,000 | $ | - | $ | - | $ | 32,000 | ||||||||
Keith J. Behrens (3) | $ | 28,000 | $ | - | $ | - | $ | 28,000 | ||||||||
Richard A. Murphy (5) | $ | 43,000 | $ | - | $ | - | $ | 43,000 | ||||||||
William A. Jolly (6) | $ | 42,500 | $ | - | $ | - | $ | 42,500 | ||||||||
Robert S. Herlin (7) | $ | 44,000 | $ | - | $ | - | $ | 44,000 | ||||||||
(1) | Amounts represent the grant date fair value of stock options granted to the named directors based on provisions of ASC 718-10, Stock Compensation, which vested in fiscal year 2019. See Note 10 to the consolidated financial statements included in Part III, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2019, which was filed on March 20, 2020, for discussion regarding assumptions used to calculate fair value under the Black-Scholes–Merton valuation model. |
(2) | Mr. Haymons received fees in the amount of $32,000 in 2019 for serving as a director, chair of the audit committee through the first quarter of 2019, and member of the compensation committee of the Board through the first quarter of 2019. |
(3) | Mr. Behrens received fees in the amount of $28,000 in 2019 for serving as a director. |
(5) | Mr. Murphy received fees in the amount of $43,000 in 2019 for serving as a director and Chairman of the Board. Mr. Murphy was awarded 100,000 stock options under the 2010 Plan, which vested 50% upon his first anniversary as a Board member and 50% upon his second anniversary, and are exercisable until January 18, 2021 at a strike price of $0.37 per share. |
(6) | Mr. Jolly received fees in the amount of $42,500 in 2019 for serving as a director, a member of the audit committee, and the chair of the compensation committee. |
(7) | Mr. Herlin received fees in the amount of $44,000in 2019 for serving as a director., chair of the audit committee, and a member of the compensation committee. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information with respect to compensation plans (including individual compensation arrangements) under which equity securities registeredare authorized for issuance as of December 31, 2019:
Plan Category And Description | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans Approved by Security Holders | 1,945,333 | (1) | $ | 0.55 | 6,914,711 | (3) | ||||||
Equity Compensation Plans Not Approved by Security Holders | 655,000 | (2) | $ | 0.22 | — | |||||||
Total / Weighted Average | 2,600,333 | $ | 0.474 | 6,914,711 | ||||||||
(1) Represents (i) 1,470,667 unexercised options outstanding under the 2016 Plan, and (ii) 474,666 unexercised options under the Company’s frozen 2010 Stock Incentive Plan.
(2) Consists of: (i) 30,000 warrants issued in June 2016 to the principals of the Company’s existing investor relations firm to acquire 30,000 shares of Common Stock exercisable at $0.70 per share and (ii) 625,000 warrants issued to Cross River Partners, L.P. in connection with an Amended and Restated Subordinated Loan Agreement discussed in more detail in Note 10 to the consolidated financial statements set forth in the Form 10-K for the fiscal year ending December 31, 2019.
(3) Calculated as 10,391,711 shares of Common Stock reserved for the 2016 Plan less 2,637,165 options outstanding or exercised under the 2016 Plan and 836,667 of Restricted Stock Award shares outstanding under the 2016 Plan. No additional stock option grants will be granted under the 2010 Plan.
ANNUAL REPORT ON FORM 10-K AND ADDITIONAL INFORMATION
Annual Report
Available with this Proxy Statement (and available on the Internet as stated above) is the Company’s 2019 Annual Report on Form 10-K for the year ended December 31, 2019.
Information Available
The Company is subject to the information and reporting requirements of the Exchange Act and in accordance with the Exchange Act, the Company files periodic reports, documents and other information with the SEC relating to its business, financial statements and other matters, including the Company’s annual report on Form 10-K for the year ended December 31, 2019, and any reports prior to or subsequent to that date.
These reports and other information filed with the SEC by the Company may be inspected and are available for copying at the public reference facilities maintained at the Securities and Exchange Commission at 100 F Street NW, Washington, D.C. 20549.
The Company’s filings with the SEC are also available to the public from the SEC’s website, http://www.sec.gov and at the Company’s website, http://www.enservco.com. Our Annual Report on Form 10-K for the year ended December 31, 2019, and other reports filed under the Securities Exchange Act of 1934, and the
Company continues to have an obligation to submit periodic reports to the
Securities and Exchange Commission and comply with other obligations imposed by
the federal securities laws. The Company does not currently have any intention
to attempt to terminate its reporting (or other) obligations under the federal
securities laws. Even if Proposal No. 2 is approved the Company expects to
continue to comply with its obligations under the federal securities laws until
the dissolution process is complete or the Company otherwise has no reporting
obligations under the federal securities laws.
Our stock is currently traded on the OTC Bulletin Board under the symbol
"ASPN.OB." If the Company is dissolved, we would close our stock transfer books
on the Dissolution Date and at such time cease recording stock transfers and
issuing stock certificates (other than replacement certificates). Accordingly,
it is expected that trading in shares of our common stock would likely cease on
and after such date.
Expenses and Indemnification
In connection with and for the purpose of implementing and assuring
completion of the dissolution, we may, in the absolute discretion of our Board
of Directors, pay any brokerage, agency, legal and other fees and expenses of
persons rendering services to us in connection with the collection, sale,
exchange or other disposition of our property and assets and the implementation
of the Board's plan of liquidation, including, but not limited to, the payment
of retainer feesare also available to any such persons.
We will continue to indemnify our officers, directors, employeesstockholder at no cost upon request to: Corporate Secretary, Enservco Corporation, 999 18th Street, Suite 1925N, Denver, Colorado 80202; Phone: (866) 998-8731.
OTHER MATTERS
Management and agents
in accordance with Article VIII of our Restated Certificate of Incorporation,
Section 5.01 of our Amended and Re-Stated By-laws, the indemnification
32
agreements entered into between the Company and its officers and directors, and
any contractual arrangements for actions taken in connection with the plan of
liquidation and the winding down of the Company's affairs. Our Board of
Directors, in its absolute discretion, is authorized to obtain and maintain
insurance as may be necessary, appropriate or advisable to cover any such
obligations. Immediately prior to the completion of the distribution or
liquidation of all of our assets in the winding down of our affairs (the
Effective Time"), we will obtain and fully pay for insurance policies that
provide coverage for events occurring on or before the Effective Time with a
claims period of six years from and after the Effective Time from insurance
carriers with the same or better credit ratings as our current insurance
carriers with respect to directors' and officers' liability insurance with
benefits and levels of coverage that are no less favorable than those on our
existing policies.
Sales of the Company's Assets
If the Company is dissolved, the Board of Directors has the authority to
sell all or substantially all our remaining assets following our dissolution.
Assuming we do not identify another business opportunity, our only remaining
assets will be cash, cash equivalents and investments, accounts receivable,
potential tax refunds, property, and equipment, and certain other assets.
From and after the Dissolution Date, sales of our remaining assets will be
made on such terms as are approved by our Board of Directors and may be
conducted by competitive bidding or privately negotiated sales. The prices at
which we will be able to sell our remaining various assets will depend largely
on factors beyond our control, including, but not limited to, the compatibility
of our intellectual property rights with the most likely purchasers of such
rights, the extent to which such intellectual property rights are viewed as
valuable by such companies and the condition of financial markets and the
availability of financing to prospective purchasers of assets. In addition, we
may not obtain as high a price for our remaining assets as we might secure if we
were not in liquidation.
Contingent Liabilities; Contingency Reserve
Under the DGCL, if we dissolve the Company we are required to pay or
provide for paymentknow of all of our liabilities and obligations. Following the
Dissolution Date, we will pay, to the extent of our funds and assets available,
all expenses and fixed and other known liabilities, or set aside as a
contingency reserve, assets which we believeno matters to be adequate for payment thereof
(the "Contingency Reserve").
We are currently unable to estimate with precisionbrought before the amount of any
Contingency Reserve that may be required, butMeeting other than as set forth herein. However, if any such amount will be deducted
before the determination of amounts available for distribution to stockholders.
The actual amount of any Contingency Reserve will be based upon estimates and
opinions of management and our Board of Directors and derived from review of our
estimated operating expenses, including, but not limited to, anticipated
compensation payments, estimated legal and accounting fees, rent, payroll and
other taxes payable, miscellaneous office expenses, other expenses accrued in
our financial statements, and contractual liability claims. There can be no
assurance that the Contingency Reserve in fact will be sufficient. After the
liabilities, expenses and obligations for which the Contingency Reserve had been
established have been satisfied in full, we will distribute to our stockholders
any remaining portion of the Contingency Reserve. The remaining portion of the
Contingency Reserve will be paid to the holders of shares of our common stock on
a pro rata basis.
33
Regulatory Approvals
No United States federal or state regulatory requirements must be complied
with or approvals obtained in connection with a dissolution.
Absence of Appraisal Rights
Under Delaware law, our stockholdersmatters properly are not entitled to appraisal rights
for their shares of our common stock in connection with the transactions
contemplated by a dissolution or to any similar rights of dissenters under
Delaware law.
Potential Liability of Stockholders
Under the DGCL, in the event that we dissolve and we fail to create
adequate reserves for liabilities, or should such reserves be insufficient to
satisfy the aggregate amount ultimately found payable in respect of our expenses
and liabilities, each stockholder could be held liable for amounts due to
creditors to the extent of the amounts that such stockholder received from us.
Each stockholder's exposure to liability is limited to his, her or its pro rata
portion of the amounts due to creditors and is capped, in any event, at the
amount of the distribution actually received by such stockholder. In addition, a
creditor could seek an injunction to prevent us from making distributions, which
could delay and/or diminish distributions to stockholders.
Material U.S. Federal Income Tax Consequences
The following discussion is a general summary of the material U.S. Federal
income tax consequences of a dissolution of the Company or the receipt of
non-liquidating distributions, but does not purport to be a complete analysis of
all the potential tax effects. EACH STOCKHOLDER IS ADVISED TO CONSULT HIS, HER
OR ITS TAX ADVISOR FOR ACTUAL TAX CONSEQUENCES TO HIM, HER OR IT OF THE PLAN OF
LIQUIDATION OR THE RECEIPT OF NON-LIQUIDATING DISTRIBUTIONS.
The discussion addresses neither the tax consequences that may be relevant
to particular categories of investors subject to special treatment under certain
federal income tax laws (such as dealers in securities, banks, insurance
companies, tax-exempt organizations, and foreign individuals and entities) nor
any tax consequences arising under the laws of any state, local or foreign
jurisdiction. The discussion is based upon the Code, Treasury Regulations, the
IRS rulings and judicial decisions now in effect, all of which are subject to
change at any time; any such changes may be applied retroactively. The following
discussion has no binding effect on the IRS or the courts. Distributions may
occur at various times and in more than one tax year, and it is possible that no
distribution will be made. No assurances can be given that the tax treatment
described herein will remain unchanged at the time of such distributions. No
ruling has been requested from the IRS with respect to the anticipated tax
treatment of the dissolution or the receipt of non-liquidating distributions,
and we will not seek an opinion of counsel with respect to the anticipated tax
treatment. The failure to obtain a ruling from the IRS or an opinion of counsel
results in less certainty that the anticipated tax treatment summarized herein
will be obtained. If any of the conclusions stated herein proves to be
incorrect, the result could be increased taxation at the Company and/or
stockholder level, thus reducing the benefit to our stockholders and us from the
liquidation or from non-liquidating distributions.
Consequences to the Company. If, and/or when, the Board of Directors
approves a plan of liquidation and until the liquidation is complete, we will
continue to be subject to tax on our taxable income. We will generally recognize
34
income, gain or loss on sales of our property or collection of claims pursuant
to the plan of liquidation. Upon any distribution of property to our
stockholders, we will generally recognize gain or loss as if such property was
being sold to our stockholders at its fair market value.
Consequences to our stockholders. If the Company is dissolved, a
stockholder generally will recognize gain or loss equal to the difference
between (i) the sum of the amount of cash and the fair market value of any
property distributed to such stockholder, if any, less any known liabilities
assumed by the stockholder or to which the distributed property is subject, and
(ii) such stockholder's tax basis for his, her or its shares of our common
stock. A stockholder's tax basis in his or her shares will depend upon various
factors, including, but not limited to, the stockholder's cost and the amount
and nature of any distributions received with respect thereto. A stockholder's
gain or loss will be computed on a "per share" basis. We expect to make more
than one liquidating distribution to our stockholders, each of which will be
allocated proportionately to each share of our common stock owned by a
stockholder. The value of each liquidating distribution will be applied against
and reduce a stockholder's tax basis in his or her shares of our common stock.
Gain will be recognized by reason of a liquidating distribution only to the
extent that the aggregate value of such distributions received by a stockholder
with respect to a share exceeds his, her or its tax basis for that share. Any
loss will generally be recognized only when the final distribution from us has
been received and then only if the aggregate value of the liquidating
distributions with respect to a share is less than the stockholder's tax basis
for that share. If a stockholder is required to return any distribution, any
payments by a stockholder in satisfaction of any liability not covered by the
Contingency Reserve, which is described in greater detail elsewhere in this
Proxy Statement, generally would produce a loss in the year paid, which loss
could fail to cause a reduction in taxes payable in an amount equal to the
amount of the taxes paid on amounts previously distributed. Gain or loss
recognized by a stockholder will generally be treated as capital gain or loss
provided the shares are held as capital assets. Such gain or loss will be
subject to tax at the short-term or long-term capital gain tax rate, depending
on the period for which such shares are held by the stockholder. Long-term
capital gain of non-corporate taxpayers may be subject to more favorable tax
rates than ordinary income or short-term capital gain. The deductibility of
capital losses is subject to various limitations. We will provide our
stockholders and the IRS with a statement each year of the amount of cash and
the fair market value of any property distributedpresented to the stockholders during
that year,for action at such timethe Meeting and in such manner as required byany adjournments or postponements thereof, it is the Treasury
Regulations.
Consequences of Non-Liquidating Distributions. If the Company is not
dissolved and we make a non-liquidating distribution to our stockholders, the
amount they receive will be treated as a dividend to the extentintention of the stockholder's share of our current and accumulated earnings and profits, if any,
as determined under federal income tax principles. Such a dividend would be
includibleproxy holder named in the stockholder's gross income and no current loss would be
recognized. Currently, dividendsenclosed proxy to vote in his discretion on all matters on which the shares represented by such proxy are taxable at a maximum rate for individual
stockholders of 15% if certain holding period and other requirements are met. We
anticipate that any amount distributed in excess of our current earnings and
profits will be treated as capital gain from the sale of our stock.
To the extent that a corporate stockholder is treated as receiving a
dividend, as described above, it may be eligible for a dividends received
deduction (subjectentitled to applicable limitations). In addition, any amount received
by a corporate stockholder that is treated as a dividend may constitute an
"extraordinary dividend" under Section 1059 of the Code, thereby resulting in a
reduction of tax basis or possible gain recognition in an amount equal to the
non-taxed portion of the dividend. Corporate stockholders should consult their
own tax advisors as to the application of Section 1059 of the Code to the tax
consequences of a dividend.
35
Back-Up Withholding. Unless a stockholder complies with certain reporting
and/or Form W-9 certification procedures or is an exempt recipient under
applicable provisions of the Code and Treasury Regulations, he, she or it may be
subject to back-up withholding tax with respect to any payments received
pursuant to the dissolution or from the non-liquidating distributions. The
back-up withholding tax is currently imposed at a rate of 28%.
Back-up withholding generally will not apply to payments made to some
exempt recipients such as a corporation or financial institution or to a
stockholder who furnishes a correct taxpayer identification number or provides a
certificate of foreign status and provides certain other required information.
If back-up withholding applies, the amount withheld is not an additional tax,
but is credited against the stockholder's U.S. federal income tax liability.
Taxation of Non-United States Stockholders. Foreign corporations or persons
who are not citizens or residents of the United States should consult their tax
advisors with respect to the U.S. and non-U.S. tax consequences of the
dissolution or the receipt of non-liquidating distributions.
State and Local Income Tax Consequences. Stockholders may also be subject
to liability for state and local taxes with respect to the receipt of
liquidating or non-liquidating distributions. State and local tax laws may
differ in various respects from federal income tax law. Stockholders should
consult their tax advisors with respect to the state and local tax consequences
of the dissolution or the receipt of non-liquidating distributions.
The foregoing summary of certain income tax consequences is included for
general information only and does not constitute legal advice to any
stockholder. The tax consequences of a dissolution or the receipt of
non-liquidating distributions may vary depending upon the particular
circumstances of the stockholder. We recommend that each stockholder consult
his, her or its own tax advisor regarding the tax consequences of the
dissolution or the receipt of non-liquidating distributions.
Vote Required and Board Recommendation
Proposal 2 must be approved by the affirmative vote of the holders of a
majority of Aspen's outstanding common stock.
As described above, the Board of Directors did not reach an agreement as to
whether it recommends stockholders vote For, Against or Abstain from voting on
the proposal to grant Aspen's Board of Directors the authority, in its
discretion, to dissolve the Company, as such the proposal is being submitted
without a recommendation from the Board as a whole.
INDEPENDENT PUBLIC ACCOUNTANTS
Effective November 3, 2008 Gordon, Hughes, & Banks, LLP ("GH&B") resigned
as the independent registered accounting firm for Aspen. GH&B recently entered
into an agreement with Eide Bailly LLP ("Eide Bailly"), pursuant to which Eide
Bailly acquired the operations of GH&B. Certain of the professional staff and
shareholders of GH&B joined Eide Bailly either as employees or partners of Eide
Bailly and will continue to practice as members of Eide Bailly. On November 3,
2008, the Company's Board of Directors approved the engagement of Eide Bailly as
the Company's independent registered public accounting firm.
36
A representative of Eide Bailly is expected to be present at the Annual
Meeting, and assuming the representative is present will have an opportunity to
make a statement if such representative desires to do so, and will be available
to respond to appropriate questions from stockholders.
(a) Audit Fees.
GH&B billed us aggregate fees for audit and tax services in the amount of
approximately $46,336 for the fiscal year ended June 30, 2008 and $43,696 for
the fiscal year ended June 30, 2009. Eide Bailly billed us aggregate fees for
audit services in the amount of approximately $11,845 for the fiscal year ended
June 30, 2009.
These amounts were billed for professional services that GH&B and Eide
Bailly provided for the audit of our annual financial statements, review of the
financial statements included in our report on 10-Q and other services typically
provided by an accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
(b) Audit-Related Fees.
GH&B billed us aggregate fees in the amount of $0 and $515 for the fiscal
years ended June 30, 2009 and 2008 for assurance and related services that were
reasonably related to the performance of the audit or review of our financial
statements.
Eide Bailly billed us aggregate fees in the amount of $0 for the fiscal
year ended June 30, 2009 for assurance and related services that were reasonably
related to the performance of the audit or review of our financial statements.
(c) Tax Fees.
GH&B billed us aggregate fees in the amount of approximately $0 for the
fiscal year ended June 30, 2009, and $7,395 for the fiscal year ended June 30,
2008, for tax compliance services.
Eide Bailly billed us aggregate fees in the amount of approximately $7,640
for the fiscal year ended June 30, 2009, for tax compliance services.
(d) All Other Fees.
GH&B billed us aggregate fees in the amount of $0 for the fiscal years
ended June 30, 2009 and 2008 for other fees.
Eide Bailly billed us aggregate fees in the amount of $0 for the fiscal
years ended June 30, 2009 for other fees.
(e) Audit Committee's Pre-Approval Practice.
Inasmuch as Aspen does not have an audit committee, Aspen's board of
directors performs the functions of its audit committee. Section 10A(i) of the
Securities Exchange Act of 1934 prohibits our auditors from performing audit
services for us as well as any services not considered to be "audit services"
unless such services are pre-approved by the board of directors (in lieu of the
audit committee) or unless the services meet certain de minimis standards.
37
The Board of Directors has adopted resolutions that provide that the Board
must:
Preapprove all audit services that the auditor may provide to us or any
subsidiary (including, without limitation, providing comfort letters in
connection with securities underwritings or statutory audits) as required
by ss.10A(i)(1)(A) of the Securities Exchange Act of 1934 (as amended by
the Sarbanes-Oxley Act of 2002).
Preapprove all non-audit services (other than certain de minimis services
described in ss.10A(i)(1)(B) of the Securities Exchange Act of 1934 (as
amended by the Sarbanes-Oxley Act of 2002) that the auditors propose to
provide to us or any of its subsidiaries.
The board of directors considers at each of its meetings whether to approve any
audit services or non-audit services. In some cases, management may present the
request; in other cases, the auditors may present the request. The board of
directors has approved Gordon, Hughes & Banks, LLP and Eide Bailly, LLP
performing our audit and tax services for the 2008 and 2009 fiscal years.
The percentage of the fees for audit, audit-related, tax and other services
were as set forth in the following table:
Eide Bailly, LLP Gordon Hughes & Banks LLP
Fiscal Year Ended June 30, Fiscal Year Ended June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Audit fees 61% 0% 100% 86%
Audit-related fees 0% 0% 0% 1%
Tax fees 39% 0% 0% 13%
All other fees 0% 0% 0% 0%
38
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Only one Notice, and if applicable
If hard copies of the materials are requested, we will send only one Proxy Statement and annual report is
being deliveredother corporate mailings to stockholders sharing anwho share a single address unless we have received contrary instructions from one or more ofany stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, the stockholders. Upon theCompany will deliver promptly upon written or oral request of a stockholder, we will deliver promptly a separate Notice, and
if applicable a separate copy of the proxy statement and annual reportProxy Statement to a stockholder at a shared address to which a single copy of the Proxy Statement was delivered. Stockholders desiringYou may make such a written or oral request by sending a written notification stating (i) your name, (ii) your shared address and (iii) the address to receivewhich the Company should direct the additional copy of the Proxy Statement, to the Company at Corporate Secretary, Enservco Corporation, 999 18th Street, Suite 1925N, Denver, CO 80202; Phone: (866) 998-8731.
If multiple stockholders sharing an address have received one copy of this Proxy Statement or any other corporate mailing and would prefer the Company to mail each stockholder a separate copy of future mailings, you may send notification to or call the Company’s Corporate Secretary in the future may contact us
through our offices at 2050 South Oneida Street, Suite 208, Denver, CO 80224, or
by telephone: (303) 639-9860.
Stockholders who share ansame manner as described above. Additionally, if current stockholders with a shared address but are receivingreceived multiple copies of this Proxy Statement or other corporate mailings and would prefer the Company to mail one copy of future mailings to stockholders at the shared address, notification of such request may also be made by mail or telephone to the Company’s Corporate Secretary in the same manner.
2021 Annual Meeting of Stockholders
Enservco Corporation anticipates its next Annual Meeting of Stockholders will be held in June of 2021. Under Rule 14a-8, if a stockholder wants us to include a proposal in our proxy statement and/or annual report may contactfor presentation at our 2021 Annual Meeting of Stockholders, the proposal must be received by us throughby December 31, 2020. If the date of our offices at 2050
South Oneida Street, Suite 208, Denver, CO 80224, or by telephone: (303)
639-9860 to request that a single copy be delivered.
PROPOSALS FROM STOCKHOLDERS
Aspen expects to hold its next annual meeting2021 Annual Meeting of shareholders (the "2010
Meeting") on or about November 20, 2010. If this dateStockholders is advanced or delayed by more than 30 days Aspen will, as required by Rule 14a-5(f), inform shareholdersfrom the anniversary date of our 2020 Annual Meeting of Stockholders, stockholders who wish to submit proposals for the change by including2021 Annual Meeting of Stockholders must submit such proposals a notice under Item 5reasonable amount of its next quarterly report on
Form 10-Q or, if impracticable, another means reasonably calculated to inform
shareholders.
Proposals from stockholders intended to be present attime before we print and mail our proxy materials for the 20102021 Annual Meeting of Stockholders. All proposals should be addressed to Aspen ExplorationEnservco Corporation, Attention: Corporate Secretary, 2050 South Oneida999 18th Street, Suite 208,1925N, Denver, CO 80224, and we must
receive the proposals by June 10, 2010.80202. Upon receipt of any such proposal, we shall determine whether or not to include any such proposal in the Proxy
Statement and proxymeeting materials in accordance with applicable law. It is suggested that stockholders forwardsubmit such proposals by Certified Mail-Return Receipt Requested.
After June 10, 2010, any stockholder proposal submitted outside the process of
Rule 14a-8 will be considered to be untimely.
ANNUAL REPORT TO STOCKHOLDERS
This proxy statement is being accompanied by our Annual Report to
stockholders on Form 10-K for the year ended June 30, 2009. The annual report to
stockholders includes our audited financial statements. Our Annual Report on
Form 10-K for the year ended June 30, 2009, and other reports filedcertified mail, return receipt requested.
As discussed under the Securities Exchange Actheading “Committees of 1934, are available to any stockholder at no cost
upon request to our offices at 2050 South Oneida Street, Suite 208, Denver, CO
80224, or by telephone: (303) 639-9860, or through the Internet at www.sec.gov.
INCORPORATION OF INFORMATION BY REFERENCE
The following information is incorporated by reference intoBoard – No Nominating Committee” elsewhere in this proxy statement, fromthe Company’s Bylaws set forth specific information that must be included with any nomination of a person to stand for election of directors at the next Annual Meeting or special meeting of the stockholders at which directors are to be elected.
The SEC also sets forth procedures under which stockholders may make proposals outside of the process described above in order for a stockholder to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders. These procedures require that stockholders must submit nominations or items of business in writing to our annual reportCorporate Secretary at our offices in Denver, Colorado. We must receive the notice of your intention to introduce a nomination or to propose an item of business at our 2021 Annual Meeting no later than 45 days before the date on Form 10-Kwhich the Company first sent proxy materials for the year ended Juneprior year’s annual meeting if it is being held within 30 2009,days preceding the anniversary date of this year’s annual meeting (June 26, 2020), which report is included in our annual report to stockholders that accompanies
this Proxy Statement:
o Our Management's Discussion and Analysis of Financial Condition and Results
of Operations in Item 7 of our annual report on Form 10-K (included in our
annual report to stockholders that accompanies this Proxy Statement),
entitled "Item 7. Management's Discussion and Analysis of Financial
Conditions or Plan of Operation."
39
o Our financial statements attached to our annual report on Form 10-K
(included in our annual report to stockholders that accompanies this Proxy
Statement).
OTHER MATTERS
Management does not know of any other matters to be broughta reasonable time before the meeting. Should anyCompany will make its proxy materials available to stockholders.
Assuming that our 2021 Annual Meeting is held on schedule, we must receive notice of your intention to introduce a nomination or other matter requiringitem of business at that meeting by March 3, 2021, which is a vote of stockholders arise atreasonable time before the meeting,Company will make its proxy materials available to stockholders. In order to curtail controversy as to the persons named indate on which a proposal was received by us, it is suggested that proponents submit their proposals by certified mail, return receipt requested. Such proposals must also meet the proxy will voteother requirements established by the proxies in accordance with
their best judgment.
By OrderSEC for stockholder proposals.
BY ORDER OF THE BOARD OF DIRECTORS:
Enservco Corporation
Richard A. Murphy, Chairman of the Board of Directors:
ASPEN EXPLORATIONDirectors
Appendix A
FORM OF
CERTIFICATE OF AMENDMENT TO THE
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ENSERVCO CORPORATION
R.V. Bailey, Chief Executive Officer
40
ASPEN EXPLORATION CORPORATION
2050 South Oneida Street, Suite 208
Denver, CO 80224
PROXY This Proxy
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
Enservco Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), by its duly authorized officer, does hereby certify:
The Second Amended and Restated Certificate of Incorporation of the Corporation is Solicitedhereby amended as follows:
Article IV of the Second Amended and Restated Certificate of Incorporation is hereby amended and restated as follows:
“The authorized capital stock of the Corporation shall consist of 110,000,000 shares, which shall be divided into two classes, consisting of 100,000,000 shares of common stock (“Common Stock”) and 10,000,000 shares of preferred stock (“Preferred Stock”), each with $0.005 par value per share. The designations, preferences, privileges, rights and voting powers and any limitations, restrictions or qualifications thereof, of the shares of each class are as follows:
A. The holders of outstanding shares of Common Stock shall have the right to vote on Behalfall questions to the exclusion of all other stockholders, each holder of record of Common Stock being entitled to one vote for each share of Common Stock standing in the name of the stockholder on the books of the Corporation, except as may be provided in this Certificate of Incorporation, in a Preferred Stock Designation (as hereinafter defined), or as required by law.
B. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors (or any committee to which it may duly delegate the authority granted in this Section B of Article IV) is hereby empowered to authorize the issuance from time to time of shares of Preferred Stock in one or more series, for such consideration and for such corporate purposes as the Board of Directors may from time to time determine, and by filing a certificate pursuant to applicable law of the State of Delaware (hereinafter referred to as a “Preferred Stock Designation”) as it presently exists or may hereafter be amended to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent now or hereafter permitted by this Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights and redemption rights thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors (or such committee thereof) providing for the issuance of such series of Preferred Stock. Each series of Preferred Stock shall be distinctly designated. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:
(i) The undersigned hereby appoints R.V. Baileydesignation of the series, which may be by distinguishing number, letter or title.
(ii) The number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding).
(iii) The amounts payable on, and Kevan B. Hensman,the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or either
onenoncumulative.
(iv) Dates at which dividends, if any, shall be payable.
(v) The redemption rights and price or prices, if any, for shares of them,the series.
(vi) The terms and amount of any sinking fund provided for the purchase or redemption of shares of the series.
(vii) The amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
(viii) Whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made.
(ix) Restrictions on the issuance of shares of the same series or of any other class or series.
(x) The voting rights, if any, of the holders of shares of the series.
C. Reservation of Right. The Board of Directors of the Corporation reserves the right by subsequent amendment of (i) this Certificate of Incorporation or (ii) the resolutions of the Board of Directors providing for the creation of a series of Preferred Stock (the “Adopting Resolutions”), to increase or decrease the number of shares constituting Preferred Stock or any series thereof (but not below the number of shares then outstanding) and in any other respects to amend this Certificate of Incorporation or the Adopting Resolutions, in each case, within the limits provided by law, this Certificate of Incorporation and any applicable contract or instrument binding on the Corporation.
D. Other Provisions Applicable To Preferred Stock And Common Stock
1. Cumulative voting shall not be allowed in elections of directors or for any other purpose.
2. No holders of shares of Preferred Stock or Common Stock of the Corporation shall be entitled, as Proxy, eachsuch, to any preemptive or preferential right to subscribe to any unissued stock or any other securities which the Corporation may now or hereafter be authorized to issue. The Board of Directors of the Corporation, however, in its discretion by resolution, may determine that any unissued securities of the Corporation shall be offered for subscription solely to the holders of Preferred Stock or Common Stock of the Corporation, or solely to the holders of any class or classes of such stock, which the Corporation may now or hereafter be authorized to issue, in such proportions based on stock ownership as said board in its discretion may determine.
3. The Board of Directors may restrict the transfer of any of the Corporation’s stock issued by giving the Corporation or any stockholder “first right of refusal to purchase” the stock, by making the stock redeemable, or by restricting the transfer of the stock under such terms and in such manner as the directors may deem necessary and as are not inconsistent with the powerlaws of the State of Delaware. Any stock so restricted must carry a conspicuous legend noting the restriction and the place where such restriction may be found in the records of the Corporation.
Upon the filing and effectiveness (the “Effective Time”), pursuant to appoint his substitute,the General Corporation Law of the State of Delaware, of this Certificate of Amendment to the Second Amended and hereby
authorizes themRestated Certificate of Incorporation of the Corporation, each ________ (_______) shares of Common Stock either issued and outstanding or held by the Corporation in its treasury immediately prior to vote, as designated below, allthe Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock (the “Reverse Stock Split”). No fractional shares shall be issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive fractional shares shall be entitled to the rounding up of the fractional share to the nearest whole number. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock of ASPEN EXPLORATION CORPORATION held of recordrepresented by the undersignedOld Certificate shall have been combined, subject to the elimination of fractional share interests as described above.”
This amendment to the Corporation’s Second Amended and Restated Certificate of Incorporation shall be effective on October 2,
2009, atand as of the Annual Meetingdate of Stockholdersfiling of this Certificate of Amendment with the Secretary of State of the State of Delaware.
The forgoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware by the vote of a majority of each class of outstanding stock of the Corporation entitled to vote thereon.
* * *
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be held on November 20, 2009, and
at any adjournments or postponements thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below ___ WITHHOLD AUTHORITY ____ or (Except as
marked to the contrary below) to vote for all nominees listed below:
(INSTRUCTION: To withhold authority to vote for any individual nominee mark
the box next to the nominee's name below.)
R.V. Bailey ___
Robert A. Cohan ___
Kevan B. Hensman ___
Douglas P. Imperato ___
2. APPROVAL OF RESOLUTION GRANTING THE BOARD OF DIRECTORS THE AUTHORITY IN ITS
SOLE DISCRETION TO DISSOLVE ASPEN EXPLORATION CORPORATION, BUT SUCH
DISCRETION MUST BE EXERCISED WITHIN TWELVE MONTHS.
FOR: _______ AGAINST: _______ ABSTAIN: _______
This proxy, when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made,its duly authorized officer this proxy will vote
FOR each day of the directors and abstain, 2020.
Name:
Title:
Proxy Card from voting on proposal no. 2
(dissolution).
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
___________________________________ Please check here if you plan to
Signature attend the Annual Meeting: [ ]
Date: _______________________, 2009
___________________________________
Signature if held jointly
Computershare.
